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V1110-14 16 April 2014 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · aportación no dineraria

Proposed contribution does not meet special branch activity rules without legal conditions met

A Spanish company asks whether it can contribute four UK buildings to a new local company under the special branch activity regime and whether it may benefit from dividend and foreign-source income exemption. The DGT responds that the operation does not qualify as a branch activity contribution and that exemption depends on meeting participation, residency, and economic activity requirements.

The question raised

1. Whether the transaction may qualify for the special regime of Chapter VIII of Title VII of the Recast Text of the Corporate Income Tax Law.

The DGT's ruling

The transaction does not constitute a non-monetary contribution of a business line because the contributed assets do not appear to constitute an economic unit capable of operating by its own means within the transferor. Furthermore, the special regime of Chapter VIII of the TRLIS cannot be applied because the acquiring entity is not resident in Spain nor does it have a permanent establishment in Spanish territory. Regarding the exemption of dividends and income from the transfer of shares (Art. 21 TRLIS), this could be applied if the requirements of participation, residence in a country with a treaty, and that 85% of the income derives from economic activities are met.

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