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V0534-16 9 February 2016 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · escisión parcial

The special demerger regime may be applied if the segregated activities constitute autonomous branches of activity

A company inquires whether the separation of its elevator maintenance activity from its design and installation activity constitutes a valid branch of activity to qualify for the special demerger regime. The DGT responds that this is possible if both parts maintain their own organization and resources that allow for autonomous economic exploitation.

The question raised

Whether, on the one hand, elevator maintenance and, on the other, the design, manufacture, and installation of lifting equipment and electrical networks, each of these activities being endowed with its own human and material resources, are considered branches of activity and, in accordance with all the foregoing, whether this would be considered a valid economic motive for the purposes of applying the special regime for mergers and demergers established in Articles 76 et seq. of the Corporate Income Tax Law.

The DGT's ruling

To qualify for the special demerger regime, the segregated assets must constitute a branch of activity, understood as a set of elements capable of functioning by its own means. This requires a differentiated business organization and autonomous economic exploitation in both the acquiring and the transferring entity. The existence of such differentiated management and organization is a matter of fact that must be proven. Furthermore, the operation must respond to valid economic motives, such as the restructuring or rationalization of activities, and must not have tax advantage as its primary purpose.

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