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V1277-16 29 March 2016 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · escisión parcial

Requirements for the special demerger regime: line of business and valid economic reasons

An entity inquired whether the segregation of its telephone tower operation could qualify for the special demerger regime. The DGT ruled that this is possible provided the transaction meets the requirements of the Corporate Income Tax Act, is carried out within a commercial framework, and there is a distinct organisation for each line of business.

The question raised

1) Whether the described transaction may qualify for the special 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, the spin-off must comply with Article 76.2 of the LIS and be carried out under Law 3/2009. The segregated assets must constitute a line of business (autonomous economic unit) and the transferring entity must maintain at least one other line of business. Furthermore, the transaction must respond to valid economic reasons and not have the primary purpose of tax fraud or evasion pursuant to Article 89.2 of the LIS.

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