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V2648-14 7 October 2014 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · escisión total

Proportional total demergers may qualify for special Corporate Tax regime, VAT non-subjectivity, and ITPAJD exemption

A real estate development company has requested a ruling on whether its proportional total demerger can qualify for the special merger and demerger regime. The Directorate General for Taxes (DGT) has determined that, provided commercial and economic requirements are met, this regime applies for Corporate Tax, the transaction is not subject to VAT, and it is exempt from ITPAJD.

The question raised

Question posed: Whether the proposed proportional total demerger operation could fall under the special tax regime for mergers, demergers, asset contributions, exchange of securities, and change of registered office of a European company or a European cooperative society from one Member State to another within the European Union, as regulated in Chapter VIII of Title VII of Royal Legislative Decree 4/2004, of March 5, approving the consolidated text of the Corporate Income Tax Law.

The DGT's ruling

In Corporate Income Tax, a total demerger is applicable if carried out under the Structural Changes Law and responds to valid economic reasons. For VAT, the transfer is not subject to tax if the transferred elements constitute an autonomous economic unit capable of carrying out an activity. For Transfer Tax on Property Transfers and Legal Acts, the operation is not subject to tax as it constitutes a restructuring and is exempt in its modalities of transfers and documented legal acts. In Stamp Duty, no tax liability arises if the operation falls under the special Corporate Income Tax regime.

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