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V0776-14 20 March 2014 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · escisión parcial

Partial divestment of a business activity may qualify for special tax regime

A company asks whether a partial divestment of its retail business to another entity can apply to the special regime for mergers and spin-offs. The DGT responds that it is possible if the conditions of economic unity and valid economic reasons are met.

The question raised

1. In relation to Corporate Income Tax:

The DGT's ruling

For Corporate Income Tax, the spin-off may qualify for the special regime if the segregated assets constitute an autonomous economic unit and the transferring entity maintains another line of business. The economic reasons presented are considered valid to avoid the general regime. Regarding VAT, the transfer shall not be subject to tax if the elements constitute an autonomous economic unit capable of carrying out an activity by its own means. For Transfer Tax/Stamp Duty, the operation shall not be subject to the corporate operations modality.

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