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V1910-23 4 July 2023 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · escisión parcial

The special demerger regime cannot be applied if the segregated assets do not constitute a line of business

A company inquired whether the segregation of an agricultural estate to create a new entity could qualify for the special partial demerger regime. The DGT responds that it cannot, as the estate does not constitute an autonomous line of business with its own organization prior to the operation.

The question raised

Question raised 1. Eligibility of the proposed restructuring operation for the Special Regime established in Chapter VII of Title VII of the Corporate Income Tax Law.

The DGT's ruling

To qualify for the special partial demerger regime, the segregated assets must constitute a line of business, understood as an autonomous economic unit capable of functioning by its own means. This requires the existence of a differentiated organization of material and human resources for said activity within the demerged entity prior to the operation. In this case, as it involves a single agricultural activity without a prior separate organization, the segregation of isolated elements does not qualify as a tax-efficient partial demerger.

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