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V0499-14 25 February 2014 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · escisión parcial

Special spin-off tax regime applicable when segregating majority stakes for valid economic reasons

A company inquired whether the segregation of a majority stake into a new entity could qualify for the special tax regime for spin-offs. The Directorate-General for Taxes (DGT) ruled that this is possible provided that commercial requirements are met and the transaction is driven by valid economic motives rather than solely for tax purposes.

The question raised

Whether the described operation may qualify for the special tax regime of Chapter VIII, Title VII of the Recast Text of the Corporate Income Tax Law approved by Royal Legislative Decree 4/2004, of March 5.

The DGT's ruling

For a partial spin-off to qualify for the special regime, the segregated assets must consist of majority holdings and the spun-off entity must maintain similar holdings or a line of business. Furthermore, the operation must not have fraud or tax evasion as its primary objective, and must respond to valid economic reasons such as the restructuring or rationalization of activities. In this case, the decoupling of a risk portfolio to improve management and organizational structure is considered a valid economic reason.

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