A taxpayer inquired whether contributing their ideal share in a community of property to a company could be classified as a contribution of a branch of activity or a non-monetary contribution to apply the special regime. The DGT ruled that it constitutes a non-monetary contribution and that the special regime may apply provided the requirements of the Corporate Income Tax Act are met and the community of property carries out an economic activity with commercial accounting.
Question posed: Whether, in accordance with the preceding background, the described operation may be considered a non-monetary contribution or a contribution of a business branch for the purposes of the special tax regime of Chapter VII of Title VII of Law 27/2014, of November 27, on Corporate Income Tax, specifically, the non-inclusion in the Personal Income Tax taxable base of any potential income that may arise as a consequence of the contributions of real estate and material assets to the newly formed company.
The transfer of an undivided interest in a community of property is not a contribution of a business branch, but a non-monetary contribution pursuant to Article 87.1 of the LIS. To apply the special regime, each co-owner must maintain at least 5% of the receiving entity and the assets must be allocated to economic activities. Furthermore, the community of property must maintain accounting records in accordance with the Commercial Code. The transaction must not have the primary purpose of fraud or tax advantage without valid economic reasons.
What is published here, applied to a company or a specific case. The first meeting is free.