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V2347-23 29 August 2023 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · escisión total

Total demergers may qualify for tax neutrality and allow for the formation of a new consolidated group

A holding company proposes a total demerger to separate the management of its shareholdings from the management of its financial investments. The DGT examines whether the operation meets tax neutrality requirements, its impact on the consolidated group, and eligibility for exemptions under Inheritance and Wealth Tax.

The question raised

1. Confirmation that the total demerger operation complies with the objective definitions legally provided for the application of the tax neutrality regime regulated in Chapter VII of Title VII of the LIS.

The DGT's ruling

A total demerger may qualify for the tax neutrality regime if carried out under the requirements of the LIS and does not have a primary purpose of tax advantage. The dissolution of the parent company extinguishes the tax group, but the new beneficiary entity subrogates into the position of the parent company, allowing for the formation of a new consolidated group. Regarding Wealth Tax, holdings in the new entity may be exempt if the requirements for economic activity, participation, and management functions are met. For the calculation of remuneration for management functions, the compensation from the former company during the fiscal year of accrual must be included.

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