Skip to content
Back to index
V0289-14 5 February 2014 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · escisión parcial

Partial spin-off does not qualify for special regime if no distinct business lines exist

A company asked whether its partial spin-off could apply to the special tax regime under economic motives. The DGT states that partial spin-off does not qualify due to the absence of distinct business lines, although a proportional full spin-off may qualify.

The question raised

Whether the proposed restructuring operation could qualify for the special tax regime regulated in Chapter VIII of Title VII of the consolidated text of the Corporate Income Tax Law. And whether the economic motives can be considered valid for the purposes of applying the aforementioned special regime.

The DGT's ruling

For a partial spin-off, the segregated assets must constitute an autonomous economic unit (line of business) that allows for the development of an economic operation distinct from that of the transferring entity. In this case, as they carry out a single information management activity, they are not considered distinct lines of business. However, in a proportional total spin-off, it is not necessary for the segregated assets to constitute lines of business to apply the special regime. The economic motives of restructuring and asset protection are considered valid to avoid the application of the prohibition due to tax fraud or evasion.

Book your free first meeting