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V3773-15 30 November 2015 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · escisión parcial

Total demergers may qualify for special regime if not primarily intended to obtain a tax advantage

A company has requested a ruling on whether a partial or total demerger of its assets can qualify for the special regime under the Corporate Income Tax Act. The DGT has determined that a partial demerger does not meet the requirements if the segregated assets do not constitute a business line, and that a total demerger's eligibility depends on its primary objective not being the reduction of tax liability through the subsequent sale of shares.

The question raised

Question posed: Whether the proposed operation could qualify for the special tax regime regulated in Chapter VII of Title VII of the Corporate Income Tax Law. And whether the economic motives can be considered valid for the purposes of applying the aforementioned special regime.

The DGT's ruling

For a partial spin-off, the segregated assets must constitute an autonomous economic unit (line of business) that allows for the development of an economic activity. In a proportional total spin-off, the special regime may be applied provided that the primary objective of the operation is not to obtain a tax advantage. If the purpose of the spin-off is to facilitate the transfer of control of the beneficiary company in order to reduce the taxation of capital gains, the special regime shall not apply.

Apply this to a real case

What is published here, applied to a company or a specific case. The first meeting is free.

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