Concentration is almost never a decision. It is the residue of something that worked. A founder sells part of a business and keeps the rest. An executive accumulates twenty years of equity awards in one employer. An inheritance arrives as a single holding that the previous generation would not sell either. In each case the position is large, it is in gain, and the reason it has not been reduced is that reducing it costs money on the day.
The conversation that follows is usually framed as risk against tax, as though the two were being weighed on the same scale. They are not comparable quantities. The risk is a probability distribution over a long period; the tax is a certain payment in a known year. What can be done is to make the certain side of that comparison accurate, and to understand which of the standard answers actually reduce it and which only move it.
What the obvious answer costs
Selling is the complete solution to the risk and the most expensive solution to the tax. In Spain the savings income scale in force since 1 January 2025 runs at 19 per cent up to 6,000 euros of savings base, 21 per cent to 50,000, 23 per cent to 200,000, 27 per cent to 300,000 and 30 per cent above that.
The shape of that scale matters more than its top rate. Because the bands are narrow relative to the size of a concentrated position, a single large disposal lands almost entirely in the highest band, and the effective rate on the whole gain converges on the marginal one. A holder whose average rate across smaller annual realizations might be materially lower pays close to the top rate for doing it once.
The other number that decides the outcome is the acquisition cost, and here the allocation rule is not optional. Article 37.2 provides that where homogeneous securities exist, those transferred are deemed to be the ones acquired first. A holder who has accumulated the same line over two decades sells the oldest and cheapest lots first, so the early disposals carry the largest gains and the highest tax, precisely the opposite of the intuition that partial selling starts gently.
Selling in tranches, and what it does not solve
The standard response is to sell across several years. It works, within limits, and the limits should be stated honestly.
What it achieves is the use of lower bands more than once. What it does not achieve, in a first in, first out system, is a lower cost basis problem, because the cheapest lots go first regardless of how the sales are spread. And what it does not address at all is the reason for selling: a position sold over five years is a concentrated position for four of them, carrying the risk the exercise was meant to remove.
There is also a behavioural cost that advisers understate. A multi-year selling programme requires a decision every year, in a market that will be up in some of those years and down in others. Programmes agreed in a calm year are routinely suspended in a bad one, at exactly the point where the concentration is doing the damage it was expected to do.
Where tranching is used, it should be written as a rule with dates and quantities rather than as an intention, and the rule should say what happens when the price falls.
Losses, and the window that removes them
Offsetting gains with realized losses elsewhere in the portfolio is the one technique that reduces the tax without moving it. It is also the one most often executed incorrectly.
Article 33.5 disallows losses on the disposal of listed securities where the taxpayer acquires homogeneous securities within the two months before or after the disposal, and extends the window to one year for unlisted securities. The disallowed loss is deferred rather than forfeited, becoming available as the remaining securities are disposed of, but deferral is not what the exercise was for.
The practical constraint is that the loss position cannot be reinstated quickly. Selling a holding at a loss and restoring the same exposure within the window defeats the whole operation, so the portfolio has to tolerate either a gap in that exposure or a genuinely different one. Where the loss and the gain are being realized in the same year, the sequencing has to be planned across the whole portfolio and across both windows, not just the two-month one.
Contributing the position to a company
The alternative most frequently proposed is to place the shares into a holding company, so that future disposals occur inside a corporate structure and the proceeds can be reinvested before any personal tax arises.
It is a real technique and it is not a way of avoiding the charge on the way in. In most systems the contribution of shares to a company is itself a disposal at market value unless a specific reorganization or exchange regime applies, and those regimes carry conditions on the size of the holding, on the consideration received and on the business purpose of the transaction. Where the regime applies, the deferral is exactly that: the gain travels into the new shares and surfaces later.
Two consequences follow that clients dislike hearing. The first is that the money is now in a company, and getting it out is a second taxable event, so the structure suits reinvestment rather than consumption. The second is that a holding company assembled around a single financial position, with no employees, no premises and no activity, is the kind of entity anti-abuse provisions are drafted for, and its defensibility depends on it doing something.
Gifts, succession and the basis question
Transferring the position rather than selling it is the technique that most often survives contact with the numbers, because in many systems a transfer on death resets the acquisition cost for the recipient while a lifetime gift does not.
Where that is the case, holding a low-cost position until death and diversifying afterwards is arithmetically powerful, and it is the quiet reason a great many concentrated positions are never reduced. It should still be said plainly what it costs: the family carries single-stock risk for a further period of unknown length, on an asset whose value at the relevant date is unknown, in order to save a tax computed on the value the asset does not yet have.
Lifetime gifts to the next generation move the position and the embedded gain together, which spreads the eventual disposal across more taxpayers and more bands. Whether that is worth doing depends on the recipient’s own residence and rates, and on gift and inheritance tax in the relevant jurisdictions, which vary enough within Europe that the answer changes with a change of address.
Moving, and the charge that follows
Changing residence to a state that taxes the disposal more lightly is the technique clients raise most often and the one where the sequence matters most, because departure itself can be the taxable event.
Article 95 bis treats the unrealized gain on shareholdings as a taxable gain when a person ceases to be a Spanish taxpayer, where they have been one for at least ten of the fifteen tax periods preceding the last one to be declared, and where either the aggregate market value of the shareholdings exceeds 4,000,000 euros, or the participation in an entity exceeds 25 per cent and the market value of that holding exceeds 1,000,000 euros.
A concentrated position of the size that prompts this conversation is usually inside those thresholds by definition. The move therefore has to be analyzed as a disposal at market value in the year of departure, and compared against selling as a resident, rather than assumed to postpone anything. Where the numbers still favour moving, the timing of the departure and the valuation date become the substantive planning question.
Giving the shares rather than the proceeds
Where a family already intends to make a substantial charitable commitment, the order in which it is done changes the tax outcome without changing what the charity receives. Giving cash raised by selling the shares means the gain is realized first and the donation is made from what is left. Giving the shares themselves, where the receiving body is able to accept and hold them, moves the position without a disposal by the donor.
The conditions are jurisdictional and they are not uniform. The recipient must qualify under the donor’s domestic rules, the relief available is usually capped by reference to income or to the value transferred, and some systems treat the transfer as a disposal at market value in any event, which removes the advantage entirely. The valuation of an unlisted holding is a further point of friction, because the relief is computed on a figure the authority may contest.
The technique is therefore narrow. It suits a family with a genuine philanthropic intention, a listed and readily valued position, and a recipient equipped to take securities. It is not a diversification strategy, and it should never be presented as one to a client whose objective is to keep the money.
Deciding what the position is for
The techniques above rearrange a cost. None of them removes it, and a client who is offered one that appears to should ask which of the four questions it is answering: when the gain is recognized, at what rate, by which taxpayer, and in which country.
The prior question is what the concentration is for. A founder who intends the holding to pass to the next generation intact is running a succession plan, and should be advised on control, liquidity for the tax on death, and the family agreement, rather than on selling programmes. A holder who simply has not got round to it is running an unmanaged risk, and the honest advice is that the tax cost of fixing it is smaller than they think relative to the loss they are exposed to.
The two situations attract different work, and the mistake is to treat every concentrated position as the second. In one mandate the entire analysis turned out to be unnecessary, because the family had no intention of ever selling and the real requirement was liquidity to pay a future succession charge without touching the shares. That is a different instruction, and a cheaper one.