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V2561-14 1 October 2014 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · canje de valores

Special regimes for share exchanges and demergers applicable if autonomy and economic grounds are met

A company proposes a share exchange and a partial demerger of its business lines. The DGT rules that these operations may qualify for special Corporate Tax and VAT regimes, provided legal requirements are met and they are carried out for economic rather than purely tax-driven reasons.

The question raised

Whether the application of the special regime under Chapter VIII of Title VII of the consolidated text of the Corporate Income Tax Law is appropriate for the proposed securities exchange operations and partial spin-off of business lines. And whether the alleged motives are considered economically valid for these purposes.

The DGT's ruling

For the exchange of securities, the special regime shall apply if the acquiring entity obtains the majority of voting rights and meets the residency requirements. A partial spin-off may qualify for the special regime if the segregated business lines constitute autonomous economic units capable of operating by their own means. Regarding VAT, the transfer shall not be subject to tax if the transferred elements allow for the conduct of an autonomous economic activity. The proposed restructuring motives are considered economically valid.

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