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V0179-21 4 February 2021 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · escisión

Asset spin-offs are not tax-neutral unless a business line with its own organisation is contributed

The taxpayer asks whether they can carry out a spin-off of their construction and rental assets tax-free. The DGT rules that to apply the special regime, the contributed business line must constitute an autonomous economic unit with separate management.

The question raised

Whether the consulting entity may undertake the process of demerging the business into entities A and B to separate all construction and rental assets as a tax-neutral operation and, therefore, exempt from taxation.

The DGT's ruling

To qualify for the special regime for demergers, the operation must be a non-monetary contribution of business branches that constitute an autonomous economic unit capable of operating by its own means. This requires that the activity previously exists within the transferor with a distinct business organization and an identified set of assets. If it involves isolated assets without their own management and organization, the operation shall not be eligible for tax neutrality.

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