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V0201-20 30 January 2020 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · escisión total no proporcional

Requirements for the special spin-off regime: the necessity for assets to constitute separate lines of business

An agricultural cooperative inquired whether its non-proportional total spin-off could qualify for the special regime under the Corporate Income Tax Act. The DGT ruled that, as there is only a single economic activity, separate management resulting from disputes between members does not transform asset blocks into independent lines of business.

The question raised

Whether the described operation can qualify for the tax regime provided for in Chapter VII of Title VII of Law 27/2014, of November 27, on Corporate Income Tax and whether valid economic reasons exist.

The DGT's ruling

In order for a non-proportional total spin-off to benefit from the special regime, the spun-off assets must constitute business lines, understood as autonomous economic units with differentiated organizations of material and human resources. Mere separate management due to disagreements between partners does not constitute a business line if there is no specialty in the operation that requires a differentiated management model. If such business lines do not exist, the special regime of Chapter VII of Title VII of the LIS is not applicable.

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