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V2146-18 18 July 2018 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · escisión parcial

Special spin-off regime may apply if segregated activities constitute autonomous business branches

An entity inquired whether the operation of a hotel/spa and a restaurant could be considered independent business branches for a partial spin-off. The DGT ruled that, provided they possess their own organisation and resources, they may qualify as business branches, even in cases involving the leasing of real estate.

The question raised

Whether the hotel and spa operation activities and the restaurant operation activities can each be considered lines of business and/or independent economic units, taking into account that both activities are carried out in clearly differentiated and independent premises from one another, with independent personnel and with elements for the exercise of the activity that are absolutely differentiated, even having different names for the hotel and spa and the restaurant, that is, with autonomous organizations and operations.

The DGT's ruling

For a partial spin-off to qualify for the special regime, the segregated assets must constitute an economic unit capable of operating by its own means. The concept of a line of business does not require compliance with the economic activity requirements of Article 5 of the LIS, particularly regarding leases. The existence of a differentiated organization of material and human resources is decisive for identifying these lines of business. Furthermore, the operation must respond to valid economic reasons and must not have tax advantage as its primary purpose.

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