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V2344-23 28 August 2023 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · escisión parcial

Partial demerger special regime requires the segregation of an autonomous line of business

A query was raised regarding whether the segregation of a real estate activity from a company that also provides clinical services can be considered a partial demerger under the special regime of Corporate Income Tax. The DGT indicates that for this to apply, the transferred assets must constitute a line of business capable of operating independently and must not have tax evasion as its primary objective.

The question raised

Whether the projected operation can be configured for tax purposes as a partial demerger operation as defined by Article 76.2.1.b) of the Corporate Income Tax Law, and, therefore, be covered by the special regime established in Chapter VII of Title VII of said Law.

The DGT's ruling

Partial demerger requires that the segregated assets constitute a line of business, understood as a set of elements capable of operating by its own means. This line of business must be previously identified within the transferring entity through a distinct business organization. Furthermore, the operation may not qualify for the special regime if its primary objective is tax fraud or evasion without valid economic reasons.

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