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V0708-21 25 March 2021 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · escisión parcial

Requirements for eligibility for the special regime for partial demergers: line of business and valid economic reasons

A cosmetics company inquires whether the segregation of its industrial activity into a new entity may qualify for the special demerger regime. The DGT indicates that this is possible if the transferred assets constitute a line of business and another is maintained in the original entity, provided that valid economic reasons exist.

The question raised

Question posed: Whether the described operation may qualify for the 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

To qualify for the special regime for partial demergers, the segregated assets must constitute a line of business (an autonomous economic unit capable of operating by its own means) and the transferring entity must retain at least one other line of business in its assets. Furthermore, the operation must respond to valid economic reasons, such as the restructuring or rationalization of activities, and must not have the primary objective of obtaining a tax advantage. The existence of these lines of business and the validity of the economic reasons are matters of fact that must be substantiated.

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