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V1403-20 13 May 2020 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · escisión parcial

Special spin-off regime inapplicable if transferred assets do not constitute a business undertaking

A company inquired whether a partial demerger of its assets to transfer rental properties could qualify for the special Corporate Tax regime. The Directorate General for Taxes (DGT) ruled that it cannot, as the segregated assets do not constitute an autonomous business undertaking within the transferring entity.

The question raised

Whether the described operation 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

In order for a non-proportional partial spin-off to qualify for the special regime, the spun-off assets must constitute business lines pursuant to Article 76.4 of the LIS. A business line requires a distinct business organization and an autonomous economic unit that allows for the conduct of an economic activity. In this case, as there is no previously developed activity that allows for the identification of asset groups with a separate organization, the elements are considered isolated and not business lines.

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