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V1520-23 2 June 2023 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · escisión parcial

Partial spin-off of a line of business may qualify for special tax neutrality regime

A company marketing products and managing real estate has queried whether the spin-off of its real estate division into a new entity can benefit from the special restructuring regime. The DGT indicates that this will depend on whether the segregated assets constitute an autonomous economic unit and whether another line of business is maintained within the transferring company.

The question raised

Whether the application of the Special Tax Regime established in the Corporate Income Tax Law is appropriate, referring to Corporate Income Tax, Personal Income Tax, Transfer Tax and Stamp Duty, and Canary Islands General Income Tax, as well as regarding the Tax on the Increase in Value of Urban Land, where applicable.

The DGT's ruling

To apply the special regime of the Corporate Income Tax Law, the spin-off must comply with commercial requirements and the segregated assets must constitute an autonomous economic unit capable of operating by its own means. Likewise, the transferring entity must retain at least one line of business in its assets. The application of this regime is conditional upon the operation not having tax advantage as its primary objective, but rather valid economic motives.

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