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V3125-14 19 November 2014 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · escisión parcial

Partial demergers only qualify for special tax regime if transferred assets constitute a line of business

A company sought clarification on whether its partial demerger project could qualify for the special regime for mergers and demergers under Corporate Tax. The DGT ruled that for this to apply, the segregated assets must constitute a line of business (an autonomous economic unit) and the transferring entity must retain another line of business.

The question raised

Whether it is possible, in accordance with the elements presented and the spirit of the transaction, to apply the proposed partial demerger to the special regime for Mergers, Demergers, Asset Contributions, and Exchange of Securities provided for in Articles 83 et seq. of Royal Legislative Decree 4/2004, of March 5.

The DGT's ruling

To apply the special regime under Article 83.2 of the TRLIS, the demerger must transfer in block one or several branches of activity, understood as a set of elements capable of operating by their own means. The concept of a branch of activity does not require compliance with the economic activity requirements of Article 27 of the LIRPF, but it does require a distinct business organization. The mere ownership of real estate without an organization of material and human resources does not constitute a branch of activity. The existence of such autonomy is a question of fact that must be proven.

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