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V3410-15 6 November 2015 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · aportaciones no dinerarias

Special regime for non-monetary contributions applicable if LIS requirements are met and valid economic reasons exist

A taxpayer has queried whether the contribution of shares in an entity can qualify for the special regime under the Corporate Income Tax Act (LIS) and whether the underlying economic reasons are valid. The Directorate General of Taxes (DGT) indicates that this is possible provided the requirements regarding participation and ownership are met, and that reasons such as the unification of activities and cost savings constitute valid economic motives.

The question raised

Question posed: Whether the proposed transaction could qualify for the special tax regime regulated in Chapter VII of Title VII of the Corporate Income Tax Act, and whether the economic reasons can be considered valid for the purposes of applying the aforementioned special regime.

The DGT's ruling

The non-monetary contribution of shares may qualify for the special regime under Article 87 of the CIT Act if the receiving entity is a resident or has a permanent establishment, if the contributor retains at least 5% of the equity, and if the requirements for continuity and activity of the entity are met. Likewise, the reasons of unifying activities to avoid management costs and improve financial capacity, as well as avoiding intercompany loans, are considered valid economic reasons pursuant to Article 89.2 of the CIT Act.

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