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V1861-14 11 July 2014 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · aportación de ramas de actividad

Special contribution regime for business branches may apply when an autonomous economic unit is transferred

A farmer inquired whether contributing their economic activity to an entity could qualify for the special asset contribution regime. The DGT ruled that this is possible if the assets constitute a business branch that allows for autonomous operation for valid economic reasons.

The question raised

Whether the described transaction may qualify for the special tax regime under Chapter VIII, Title VII of the Recast Text of the Corporate Income Tax Law approved by Royal Legislative Decree 4/2004, of March 5.

The DGT's ruling

To qualify for the special regime, the contribution by natural persons must consist of a business unit that constitutes an autonomous economic unit. This requires that the activity previously existed within the natural person and that the acquiring entity is able to carry it out under analogous conditions. Furthermore, the transaction must be driven by valid economic motives and must not have the primary purpose of obtaining a tax advantage.

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