Back to index
V2861-23 24 October 2023 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · escisión total

Total demerger may qualify for the neutrality regime under Corporate Income Tax if its primary purpose is not tax advantage

A residential property rental company inquires whether its total demerger to distribute assets among children meets the neutrality requirements under Corporate Income Tax and what its effects are on VAT, ITPAJD, and IIVTNU. The DGT indicates that it could qualify for the special Corporate Income Tax regime if commercial requirements are met and there is no fraud, but the operation will be subject to VAT as it does not constitute an autonomous economic unit.

The question raised

Question posed - Whether the operation meets the requirements for the special neutrality regime established in Chapter VII of Title VII of the Corporate Income Tax Law to be applicable. Whether, for the application of the special neutrality regime to the proposed operation, it is necessary for the company to have an employee with a full-time employment contract dedicated to the management of rentals.

The DGT's ruling

For Corporate Income Tax, a total demerger may qualify for the neutrality regime if it is carried out within a commercial context and the partners receive proportional shares, provided it is not for the purpose of obtaining a tax advantage without valid economic reasons. Regarding VAT, the transfer of real estate and debts without personnel or an organizational structure is considered a mere transfer of assets and is subject to the tax. Regarding ITPAJD, the operation is a restructuring, therefore it is not subject to the corporate operations modality and is exempt in the others. IIVTNU will not accrue if the circumstances of the second additional provision of the LIS concur.

Email
Contact