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V2983-14 4 November 2014 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · rama de actividad

Special IS regime applicable to activity branch contribution and total spin-off

A real estate rental professional asks whether they can contribute their activity to a company and then split it to facilitate generational transition. The DGT responds that the operation may qualify for the special IS regime if it is proven that the contribution constitutes a branch of activity and the spin-off is proportional.

The question raised

Whether the application of the special regime under Chapter VIII of Title VII of the consolidated text of the Corporate Income Tax Law is appropriate for the proposed operation. And whether the alleged grounds are considered economically valid for these purposes.

The DGT's ruling

The contribution of a line of business by a professional may qualify for the special Corporate Income Tax regime if it constitutes an autonomous economic unit and the contributor maintains accounting records in accordance with the Commercial Code. Proportional total spin-off also meets the requirements of the special regime. However, the concatenation of both operations could result in the accrual of the Real Estate Wealth Tax as it may be assimilated to a contribution of isolated assets.

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