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V1854-14 11 July 2014 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · reserva para inversiones en canarias

Asset segregation may lead to loss of Canary Investments Reserve if minimum holding period not met

A Canary society asks whether segregating its agricultural activity would breach the requirements of the Canary Investments Reserve (RIC). The DGT responds that if the transmitted elements do not meet the required minimum holding period, the right to the RIC will be lost and amounts that reduced the taxable base must be repaid.

The question raised

Whether the segregation operation would entail non-compliance with the requirements demanded by Law 19/1994 regarding the materialization and maintenance of the Investment Reserve in the Canary Islands allocated in previous fiscal years.

The DGT's ruling

In a demerger or segregation of assets for contribution to another company, the transferred elements must be valued at their fair market value according to the TRLIS. If the assets forming part of the segregated assets do not meet the minimum maintenance period provided for in Article 27.8 of Law 19/1994, the right to the RIC shall be lost. In such case, the entity must include in the Corporate Tax taxable base the amounts that previously reduced the taxable base by virtue of said reserve.

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