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V0233-23 13 February 2023 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · escisión total

Total demergers may qualify for special tax regime if LIS requirements are met and valid economic reasons exist

A query was raised regarding whether a total demerger of a company can apply the special regime for mergers and demergers. The DGT indicates that if the requirements of the Corporate Income Tax Act (LIS) are met and the allocation of values is proportional, it could be applicable, provided its primary purpose is not tax advantage.

The DGT's ruling

For a spin-off to qualify for the special regime under Article 76.2.1a) of the LIS, the allocation of values to the shareholders must be proportional to their previous participation, which avoids the requirement for the assets to constitute business lines. However, pursuant to Article 89.2 of the LIS, the regime shall not apply if the main objective of the transaction is tax fraud or evasion, or if it lacks valid economic reasons. Reasons such as reorganization, independent management, and risk decoupling could be considered valid economic reasons, although their classification depends on the specific facts.

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