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V1502-19 21 June 2019 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · escisión total

Total demergers may qualify for special tax regime if carried out for valid economic reasons

A taxpayer has inquired whether a demerger operation can qualify for the special tax regime for mergers and demergers. The Directorate General for Taxes (DGT) indicates that, provided commercial regulations are met and the allocation of values is proportional, the regime may apply as long as its primary purpose is not to obtain a tax advantage.

The question raised

Whether the described transaction may qualify for the special tax regime under Chapter VII of Title VII of Law 27/2014, of November 27, on Corporate Income Tax, which regulates the special tax regime for merger, demerger, asset contribution, exchange of securities, and change of registered office transactions of a Company.

The DGT's ruling

If the transaction is carried out commercially as a total demerger pursuant to Law 3/2009, it complies with Article 76.2.1ºa) of the LIS. As the allocation of shares is proportional to that of the partners, it is not necessary for the assets to constitute business lines. However, the regime shall not apply if the primary objective is tax fraud or evasion, or if it lacks valid economic reasons pursuant to Article 89.2 of the LIS.

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