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V2464-14 22 September 2014 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · escisión total

Special demerger regime may apply if the operation has valid economic reasons

A real estate leasing company has enquired whether its total demerger can qualify for the special tax regime. The DGT has ruled that if the operation is carried out as a commercial demerger and shareholders receive shares on a proportional basis, it is not necessary for the assets to constitute separate business lines, provided that valid economic reasons exist.

The question raised

Whether the described operation may qualify for the special tax regime of Chapter VIII, Title VII of the Recast Text of the Corporate Income Tax Law approved by Royal Legislative Decree 4/2004, of March 5.

The DGT's ruling

For a total spin-off to qualify for the special regime of the TRLIS, it must be carried out within the commercial sphere in accordance with the Law on Structural Modifications. If the allocation of values to the partners is proportional to their previous participation, it is not required that the spun-off assets constitute business lines. However, the operation must not have fraud or tax evasion as its primary objective, and must be based on valid economic reasons rather than the mere pursuit of a tax advantage.

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