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V0084-24 15 February 2024 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · escisión parcial

Tax neutrality cannot be applied to a partial demerger without the segregation of a business line

A company has requested a ruling regarding a partial demerger intended to transfer real estate and shareholdings to a new entity. The DGT has ruled that the operation does not meet the requirements for tax neutrality under Corporate Income Tax, as the assets do not constitute a distinct business line and no majority shareholdings are being transferred.

The question raised

1) Whether the described operation could qualify for the tax regime provided for in Chapter VII of Title VII of Law 27/2014, of November 27, on Corporate Income Tax.

The DGT's ruling

To benefit from tax neutrality in a partial demerger, the segregated assets must constitute an autonomous economic unit (line of business) that operates by its own means. In this case, the segregation of isolated real estate assets does not allow for the identification of a prior line of business in the transferring entity. Likewise, the transfer of shares does not allow for the determination of whether these confer the majority of the share capital of the entities, thereby preventing the application of the special regime.

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