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V3321-23 28 December 2023 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · escisión total

Total demergers may qualify for special regime if proportionality and economic grounds are met

A query was raised regarding whether a total demerger of a holding company could qualify for the special regime under the Corporate Income Tax Act (LIS). The Directorate General of Taxes (DGT) indicates that if the transaction meets commercial requirements and proportionality in the allocation of values, it may qualify for the regime, provided its primary objective is not tax advantage.

The question raised

1) Whether the described total spin-off operation may qualify for the Special Regime established in Chapter VII of Title VII, Special regime for mergers, spin-offs, contributions of assets, exchange of securities and change of registered office of a European Company or a European Cooperative Society from one Member State to another of the European Union of Law 27/2014 on Corporate Income Tax, as it is an operation subsumable under its Article 76.2.1 a).

The DGT's ruling

If the spin-off is carried out under Royal Decree-Law 5/2023 and meets the definition of a total spin-off under Article 76.2.1 a) of the LIS, the special regime could apply. Application does not require the assets to be business branches if the allocation of values to the shareholders is proportional. However, if donations are made following the spin-off that alter said proportionality, compliance must be re-evaluated. Finally, the regime shall not apply if the primary objective of the operation is fraud, evasion, or the mere obtaining of a tax advantage without valid economic reasons.

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