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V2928-17 15 November 2017 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · rama de actividad

Contribution of assets to two companies may qualify as a branch activity

A natural person wishes to contribute their property rental activity to two separate companies (X1 and X2). The DGT examines whether these contributions can be considered a branch activity to apply the special tax regime and whether the economic motives are valid.

The question raised

1) Whether the contribution of the asset block contributed to both companies constitutes a line of business for each of the acquiring companies, and therefore, both constitute a non-monetary contribution of a line of business eligible to benefit from the special tax regime provided for in Chapter VII of Title VII of Law 27/2014, of November 27, on Corporate Tax.

The DGT's ruling

The contribution to company X1 constitutes a line of business as it includes elements that form an autonomous economic unit with personnel and premises. The contribution to company X2 is considered a mere transfer of assets as it does not include an organizational structure. If the requirements of Article 87 of the LIS are met, the transaction qualifies for the special regime, allowing the natural person not to include income in their IRPF. The economic motives presented are considered valid to avoid the application of Article 89.2 of the LIS.

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