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V2035-23 12 July 2023 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · escisión total no proporcional

Non-proportional total demerger requires the existence of business lines to qualify for the special Corporate Income Tax regime

A company inquires whether a non-proportional total demerger may apply the special regime for Corporate Income Tax (CIT), VAT, Personal Income Tax (PIT), Transfer Tax on Property Transfers and Legal Documents (ITPAJD), and Inheritance and Gift Tax (IIVTNU). The DGT determines that it does not meet the CIT requirements as it does not constitute business lines, although the operation is not subject to VAT.

The question raised

Question posed 1. Whether the described operation may qualify for the special tax regime provided for in Chapter VII of Title VII of Law 27/2014, of November 27, on Corporate Income Tax.

The DGT's ruling

For a non-proportional total demerger to access the special CIT regime, the segregated assets must constitute business lines, understood as autonomous economic units capable of operating by their own means. In the case presented, the distribution of isolated real estate properties does not appear to constitute such business lines. Therefore, neither the special CIT regime, nor the PIT regime for partners, nor the non-subjectivity in ITPAJD or the non-accrual in IIVTNU applies. However, the transfer shall not be subject to VAT if an organizational structure of production factors constituting an autonomous economic unit is proven.

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