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V2228-18 25 July 2018 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · escisión parcial

Special regime for partial demergers and share swaps applicable if business line, voting majority, and valid economic reasons are met

A query was raised regarding whether a partial demerger and share swap could qualify for the special Corporate Tax regime and if they possess valid economic reasons. The DGT ruled that this is possible provided the requirements of the Corporate Tax Act (LIS) are met and the existence of distinct business lines and genuine economic motives is proven.

The question raised

Question posed: Whether the described operations may 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 partial demerger, the segregated assets must constitute an autonomous economic unit (line of business) and the transferring entity must maintain another line of business. In a share exchange, the acquiring entity must obtain the majority of voting rights. Both operations require that their primary purpose is not tax fraud or evasion, and valid economic reasons, such as the restructuring or rationalization of activities, must be demonstrated.

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