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V1851-20 9 June 2020 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · canje de valores

Exchange regime applicable if LIS Art. 80 requirements and valid economic reasons met

The consultant asks whether setting up a new company by contributing shares from another entity can qualify for the special merger and split regime. The DGT states this is possible if voting majority and fiscal valuation requirements are met, provided the operation is not primarily aimed at fraud or tax advantage.

The question raised

Question posed: Verify whether the incorporation of the entity Newco through the contribution of the social shares of the current partners of entity A would obtain the benefits provided for in the special regime for mergers and demergers of Corporate Income Tax, which establishes that the securities received by the entity performing the exchange of securities shall be valued, for tax purposes, at the tax value they had in the assets of the partners making the contribution, according to the rules of this Tax, the Personal Income Tax, or the Non-Resident Income Tax, while also maintaining the acquisition date of the contributing partners.

The DGT's ruling

To apply the special regime for the exchange of securities, the entity must acquire holdings that allow it to obtain the majority of voting rights and comply with the requirements of Article 80 of the LIS. The securities received shall be valued at their tax value and shall maintain the original acquisition date. The regime shall not apply if the primary objective is tax fraud or evasion, or if there are no valid economic reasons such as the restructuring or rationalization of activities.

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