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V0153-17 24 January 2017 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · canje de valores

Tax neutrality regime applicable to securities exchange if the beneficiary is a Spanish branch

A Spanish entity inquired whether the contribution of shares to a branch in Spain by a US-resident entity could qualify for the tax neutrality regime. The DGT ruled that, as the beneficiary is a branch within Spanish territory, the transaction is treated as a securities exchange with a Spanish beneficiary entity, allowing for the application of the special regime provided legal requirements are met.

The question raised

1. Whether the contribution of holdings in E1 and E2 by the requesting entity to the branch in Spain may apply the tax neutrality regime established in Chapter VII of Title VII of Law 27/2014.

The DGT's ruling

If the entity benefiting from a securities exchange is a branch located in Spanish territory, the transaction may qualify for the special tax regime under Chapter VII of Title VII of the LIS. In this case, the non-resident holdings contributed are considered assets and rights located in Spanish territory. For the application of this regime, the requirements regarding the majority of voting rights and those established in Article 80 of the LIS must be met, provided that valid economic reasons exist and there are no purposes of fraud or tax evasion.

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