Family business: negative income from other economic activities does not enter the denominator of the 50%

The High Court of Justice of Catalonia, in judgment no. 4794/2025 of 29/12/2025 (appeal 1432/2023), holds that the 50% management-remuneration threshold required by article 4.Eight.Two.c) of the Wealth Tax Act (LIP) for the family-business exemption must be calculated on positive income. Losses from other economic activities unrelated to the entity whose shares are claimed to be exempt are not included in the denominator; in the case, this meant that the threshold was not reached and the exemption was denied. This is the criterion of a regional high court, which corrects that of the Regional Economic-Administrative Tribunal (TEAR) of Catalonia in the same case. The Supreme Court, by order of 12/11/2025, declared inadmissible the cassation appeals lodged against earlier judgments of the same Section applying the same criterion, so that, for now, there is no Supreme Court ruling on the merits.

The practical consequence matters for the succession planning of family wealth. Until the Supreme Court rules, it is advisable to calculate the 50% percentage tax period by tax period on the more prudent basis, taking into account only positive income, and to keep contemporaneous documentation supporting that calculation (payslips broken down by entity, company certificates on management functions and their remuneration, personal income tax returns for the period). That documentation is the best defensive tool in a tax audit and also allows an early assessment of whether the exemption actually applies or whether the wealth structure should be reorganised before the chargeable event.

Full analysis in → Negative income from other economic activities is not computed in the 50% management-functions calculation under the family-business exemption