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V0326-21 23 February 2021 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · rama de actividad

Agricultural activity branch can qualify for special IS regime and be exempt from VAT

An farmer asks whether contributing their farm to a limited liability company can qualify for the special IS regime, whether it constitutes a valid economic reason, and its treatment under VAT, ITP/AJD and IRPF. The DGT states that if the existence of an autonomous economic unit is proven, the operation meets the requirements for the special IS regime and is exempt from VAT.

The question raised

1. Whether the described operation may qualify for the special tax regime provided for in Chapter VII of Title VII of Law 27/2014, of November 27, on Corporate Income Tax.

The DGT's ruling

The contribution of a business line may qualify for the special regime of the LIS if the assets constitute an autonomous economic unit that allows for the operation to be carried out by itself. To this end, the activity must have previously existed in the transferor and the acquiring entity must be able to carry it out under analogous conditions. The reasons for the rationalization of activities could be considered valid economic reasons, although their assessment is a matter of fact. Regarding VAT, the transfer shall not be subject to tax if an economic unit with its own organizational structure is transferred. Regarding ITP/AJD, the operation is a restructuring not subject to the corporate operations modality and exempt in the other modalities.

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