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V2220-19 19 August 2019 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · escisión total no proporcional

Special spin-off regime cannot be applied if the segregated assets do not constitute a line of business

The taxpayer asks whether a non-proportional total spin-off of a rental property can qualify for the special regime under the Corporate Income Tax Act. The DGT rules that it cannot, as the company lacks a distinct organisation that would allow for the identification of two autonomous lines of business.

The question raised

Whether the described operation can qualify for the tax regime provided for in Chapter VII of Title VII of Law 27/2014, of November 27, on Corporate Income Tax and whether valid economic reasons exist.

The DGT's ruling

For a non-proportional total spin-off to benefit from the special regime, the spun-off assets must constitute business lines, understood as autonomous economic units capable of operating by their own means. This requires a differentiated business organization for each set of assets. In this case, as a single rental property is segregated without prior separate management and organization, the requirements of Article 76.4 of the LIS are not met.

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