Skip to content
Back to index
V2955-14 3 November 2014 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · rama de actividad

Special regime for contribution of a business branch may apply if valid economic reasons exist

A professional teaching music and dance has enquired whether contributing their business activity to a company can qualify for the special regime for contributions of assets. The Directorate-General for Taxes (DGT) responds that this is possible provided the set of elements constitutes an autonomous economic unit and the primary purpose of the transaction is not tax fraud or tax advantage.

The question raised

Whether the described operation may qualify for the special tax regime under Chapter VIII, Title VII of the Recast Text of the Corporate Income Tax Law approved by Royal Legislative Decree 4/2004, of March 5.

The DGT's ruling

The contribution of a branch of activity by a natural person may qualify for the special regime if it maintains accounting records in accordance with the Commercial Code and the segregated assets allow for the development of an autonomous economic exploitation. The delimitation of the branch does not require the inclusion of all elements, provided that the activity is carried out under analogous conditions. The regime shall not apply if the primary objective is tax advantage without valid economic motives, such as the restructuring or rationalization of activities.

Book your free first meeting