The valuation of shares and social participations in unlisted companies for the purposes of the Inheritance and Donation Tax and the Personal Income Tax is determined according to the real value, understood as the market value.
In accordance with the jurisprudence of the Courts of Justice, market value can be defined as the price that an independent buyer would be willing to pay under normal market conditions.
Said value must be calculated objectively, regardless of the circumstances that arise, one of the possible forms of calculation being that established in article 16 of Law 19/1991, of June 6, on Wealth Tax, which determines that the Valuation of shares and equity interests in unlisted companies will be carried out at the theoretical value resulting from the last approved balance sheet, provided that it has been subject to review and verification and the audit report is favorable.
However, it is worth highlighting the existence of doctrinal contradiction regarding the application of said valuation method, since numerous rulings exclude the application of the valuation rules of the Wealth Tax for the purposes of valuation in the Inheritance and Gift Tax. before the practice of an expert report.
In this sense, we highlight for its importance the Supreme Court Ruling 1245/2017, of July 12, 2017, Contentious-Administrative Chamber, Second Section, which confirms the assessment criteria to be taken into account, determining in its justification that The use of this valuation method is not mandatory for the Tax Administration within the framework of the Inheritance and Donation Tax, as the Tax Law does not establish specific valuation rules when it comes to non-negotiated shares and social participations.
In short, the Administration is free to apply or not the valuation rules of the Wealth Tax in the valuation of shares and social participations in companies not listed in the Inheritance and Donations Tax.
Tax Department.
Cristina Martínez Trillo