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V2806-20 15 September 2020 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · escisión financiera

Spin-off of shares may qualify for special regime if participation and economic requirements are met

A query was raised regarding whether the segregation of shares from one entity into another can qualify for the special spin-off regime. The DGT indicates that this may apply provided the spun-off entity retains enough shares to maintain a majority interest in other entities and the transaction is driven by valid economic reasons.

The question raised

Whether the described operation could qualify for the tax regime provided for in Chapter VII of Title VII of Law 27/2014, of November 27, on Corporate Income Tax.

The DGT's ruling

In order for the financial spin-off to comply with Article 76.2.1º c) of the LIS, the spun-off entity must retain in its equity holdings of similar characteristics that confirm its majority share capital in other entities. Likewise, pursuant to Article 89.2 of the LIS, the operation must not have fraud or tax evasion as its main objective, and must be carried out for valid economic reasons and not merely for the purpose of obtaining a tax advantage. Reasons such as succession planning, execution of a family protocol, or separation of business risks could be considered valid, although their classification depends on the facts.

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