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V4306-16 6 October 2016 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · escisión total

Total demergers cannot qualify for special Corporate Tax regime if assets do not constitute business lines

A real estate management company has enquired whether its total demerger into two new entities can benefit from the special Corporate Tax regime. The DGT has ruled that it cannot, as the company lacks a sufficiently distinct organisation to consider the segregated assets as autonomous business lines.

The question raised

1) Whether the described operation could qualify for the special tax regime provided for in Chapter VII of Title VII of Law 27/2014, of November 27, on Corporate Income Tax.

The DGT's ruling

For a non-proportional total spin-off to benefit from the special Corporate Income Tax regime, the spun-off assets must constitute business lines, understood as autonomous economic units capable of operating by their own means. This requires a differentiated business organization and prior economic activity within the transferring company that allows for the identification of the affected asset pool. In this case, as there is no differentiated management and organization, the real estate properties do not constitute business lines and the special regime does not apply.

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