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V1606-20 26 May 2020 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · aportación no dineraria

Non-cash contributions may apply under special regime if LIS requirements met

A natural person enquires whether a 50% share contribution to a Spanish resident entity may qualify for the special reorganisation regime. The DGT states that this is possible if participation and ownership requirements are met, provided the transaction has valid economic motives.

The question raised

Question posed: Whether the special regime for mergers, demergers, contributions of assets, exchange of securities, and change of registered office of a European company or a European cooperative society from one Member State to another of the European Union, contained in Chapter VII of Title VII of the Corporate Income Tax Law, is applicable to the proposed business restructuring operation.

The DGT's ruling

To apply the special regime for non-monetary contributions, the recipient entity must be a resident in Spain or have a permanent establishment. The contributor must have held the shares uninterruptedly during the previous year and maintain a stake of at least 5% in the recipient entity's equity. Furthermore, the operation must not have the primary objective of tax fraud or evasion, but rather valid economic motives. The assessment of whether the motives are economic or merely fiscal is a matter of fact subject to administrative verification.

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