Kantoor beweging

Compatibility of Management and Labour Functions in Family Businesses

Marco Fernández Jun 3, 2024

TEAC clarifications on the requirement of an employed person for the family business exemption in the IP and ISD.

The resolution of the Central Economic-Administrative Court (TEAC) dated March 22, 2024, clarifies the compatibility between performing management functions and being a full-time employee, for the application of the 95% reduction in the Inheritance and Gift Tax (ISD) in the event of a death cause transfer of a family business.

The TEAC confirms that the same person can perform managerial functions and be a full-time employee in real estate leasing activities. This criterion is based on the consideration that both functions are not mutually exclusive, as long as legal requirements are met.

To apply the 95% reduction in the tax, it is necessary that the remuneration for management functions is real and verifiable. The managerial functions must involve effective management of the company or activity, and this remuneration must constitute at least 50% of the total compensation of the beneficiary.

The current resolution confirms and expands on criteria established in a previous TEAC resolution dated September 19, 2015. It reaffirms the doctrine that TEAC holds, in which the combination of management roles and full-time employment in real estate leasing activities is valid to obtain the benefits associated with the family business.

Do you have any questions?
Baker Tilly in the world
$5.2 bn
Revenue 2023

Related content

Insights Tax
Marco Fernández • Jun 3, 2024
Insights Tax
Marco Fernández • Jun 3, 2024
Baker Tilly News Tax and Legal
May 23, 2024
Insights Tax
Baker Tilly • Apr 29, 2024
Insights Tax
Baker Tilly • Apr 29, 2024
Baker Tilly newsletter
Find out about the latest developments that could affect your business
Subscribe here