A family group has enquired whether its demerger, share exchange, and asset contribution operations can qualify for the special regime under the Corporate Income Tax Act (LIS). The DGT has determined that this is possible provided technical requirements are met and valid economic reasons exist, warning that a demerger followed by donations could invalidate the regime if deemed a manoeuvre to circumvent requirements regarding business lines.
Question posed: Whether the restructuring operations proposed in points 1 to 5 above are subject to the special regime of Chapter VII of Title VII of the Corporate Income Tax Act, on the understanding that the proposed operations fit the definitions provided in Articles 75, 80, and 87 of said Act and there are valid economic motives supporting the proposed operations in accordance with Article 89.2 of said Act.
Proportional total spin-off operations may qualify for the special regime without the need for the segregated assets to constitute business activities. The exchange of securities and non-monetary contributions require compliance with specific requirements regarding residence, minimum participation, and the nature of the receiving entity. The regime does not apply if the primary objective is tax advantage, although the existence of pending tax credits does not invalidate valid economic motives. However, a spin-off followed by inter-shareholder donations may be considered a preparatory operation to circumvent the obligation to constitute business activities, which would prevent the application of the special regime.
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