Setting up a holding company mid-year: how is the main remuneration requirement for the Wealth Tax exemption calculated?

Summary

The Directorate General for Taxation (DGT), in its binding ruling (consulta vinculante) V0145-26PDF,[1] of January 27, 2026, addresses an issue of considerable practical significance: when a taxpayer sets up a holding company through an exchange of shares at some point during the tax year, how should the requirement that the remuneration for management functions in that entity constitute his or her “main source of income” be computed for the purposes of the Wealth Tax (IP) exemption? The Directorate General concludes that, by virtue of the principle of tax neutrality underpinning the special tax-neutrality regime for mergers, divisions, contributions of assets and exchanges of shares (FEAC regime), the remuneration previously received from the contributed companies must be excluded from the computation.

1. The problem: the arithmetic of the restructuring year

The exemption for shareholdings in entities under the IP—and, by extension, under the Temporary Solidarity Tax on Large Fortunes (ITSGF)—requires, among other conditions, that the taxable person effectively perform management functions in the entity and that the remuneration received for doing so represent more than 50 percent of his or her total business, professional, and personal employment income.[2]

The scenario raised in the ruling request is well known to tax advisers working with family structures: a taxpayer performs paid management functions in several operating companies during the first half of the tax year and, at some point during the year (in the case analyzed by the DGT, August), decides to set up a holding company through an exchange of shares (Article 80 of Law 27/2014, on Corporate Income TaxPDF), channeling the receipt of his or her remuneration for management functions through the new entity.

The consequence is obvious: at year-end, the remuneration received from the holding company, incorporated only a few months earlier, will be lower, in absolute terms, than the sum of the remuneration previously accrued in the operating companies that, following the reorganization, have become subsidiaries of the group. If the 50% threshold were computed without any adjustment, the shareholder could see the IP exemption defeated precisely as a result of having undertaken a restructuring that, in line with the rationale of the regime, should be tax-neutral.

2. The DGT’s solution: tax neutrality and continuity

The DGT resolves the problem by adopting a purposive interpretation of Article 5.2 of Royal Decree 1704/1999, of November 5PDF[3], which governs the conditions for the exemption where the same person performs management functions in several entities simultaneously. The provision establishes that, in such cases, the remuneration percentage is computed separately for each entity, excluding the income derived from the management functions performed in the other entities whose shares qualify for the exemption.

Although the literal wording of the provision refers to the “simultaneous” performance of functions in different entities, the DGT, relying on prior administrative doctrine[4], extends its application to cases of successive and uninterrupted performance. Where management functions are performed consecutively in the investee companies and then in the new holding company, without any interruption in time, the mere change in the identity of the paying entity should not jeopardize compliance with the remuneration requirement.

The practical consequence is decisive: in order to verify whether the remuneration from the holding company constitutes the taxable person’s “main source of income,” the remuneration previously received from the operating companies is excluded from the computation, that is, from the companies that, following the exchange, have become investees of the new parent entity. In other words, the “counter” is reset: the comparison is made solely against income not linked to the management functions performed in the restructured group.

3. Rationale: the neutrality principle of the FEAC regime

The DGT’s reasoning rests on a well-established pillar of corporate tax planning: the principle of tax neutrality that underpins the special tax-neutrality regime for mergers, divisions, contributions of assets and exchanges of shares (hereinafter, the FEAC regime), set out in Chapter VII of Title VII of the Corporate Income Tax Law (LIS). If the tax system itself allows restructuring transactions to be undertaken without an immediate tax cost, it would be manifestly contradictory for a mere corporate reorganization, with no change in the underlying economic reality, to result in the loss of a tax benefit that the taxpayer had been legitimately enjoying. Put differently: the same set of facts from an economic perspective (which is precisely what the spirit of the rule seeks to protect) should not be subject to a different and less favorable legal treatment solely because the taxpayer has opted for a regime whose stated purpose is, precisely, to ensure the tax neutrality of the transaction (assuming, of course, that valid economic reasons exist).

The DGT puts it clearly: the tax-neutrality objective inherent in restructuring transactions prevents the incorporation of the holding company from undermining the exemption that the shareholder already enjoyed in respect of his or her shares in the operating companies. This interpretation is fully consistent with the purpose of the FEAC regime and provides greater legal certainty for reorganizations undertaken under it.

4. Practical implications for tax planning

The binding ruling under review provides a highly useful criterion for professionals advising on the creation of holding structures in the family business context. In particular, the following implications are worth highlighting:

• Timing flexibility, since the restructuring is not tied to the beginning of the tax year. The taxpayer may carry out the exchange of shares at any point in the year without fear of failing the remuneration threshold merely as a matter of time apportionment.
• Certainty during the transition, given that the administrative doctrine confirms that it is not necessary to set disproportionate remuneration at the holding company during the first months of its existence in order to artificially reach the 50% threshold.
• Extension to the ITSGF: since the Temporary Solidarity Tax on Large Fortunes refers to the same exemption requirements as the IP, the criterion in ruling V0145-26 is equally applicable to this tax, which broadens its practical relevance.

5. Conclusion

Binding ruling V0145-26 reinforces the coherence of the tax system by preventing a business restructuring covered by the tax-neutrality regime from resulting in the loss of the Wealth Tax exemption as a side effect, in what, based on the foregoing, could be described as a legal incongruity. The criterion established by the DGT, namely excluding from the computation the prior remuneration from the contributed subsidiaries where management functions have been performed without interruption, provides a framework of legal certainty that allows these transactions to be planned with greater certainty and free from artificial timing constraints.

At OC | Tax & Legal we closely follow administrative doctrine and case law on family businesses and corporate restructurings in order to provide our clients with rigorous, up-to-date advice.

About the author

Juanjo García, Associate at OC | Tax & Legal, is a professional specializing in comprehensive tax advice and litigation. He is an Associate Professor of Argumentation at the Faculty of Law of Universidad CEU San Pablo. He has been recognized in the “Ones to Watch” category of the international Best Lawyers 2026 ranking.

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