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V4331-16 7 October 2016 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · escisión total no proporcional

Special corporate tax spin-off regime inapplicable without distinct business lines

A potato and maize trading company has requested clarification on whether its non-proportional total spin-off qualifies for the special Corporate Tax regime. The DGT has ruled that this is not possible, as the company failed to prove the existence of business lines with distinct organisational structures within the spun-off entity.

The question raised

1) Whether the described operation can qualify for the 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

In order for a non-proportional total demerger to benefit from the special regime of the LIS, the segregated assets must constitute business lines, understood as autonomous economic units capable of operating by their own means. This requires a differentiated and prior business organization within the transferring company. As such differentiated management and organization are not observed in this case, the operation cannot qualify for the special regime of the Corporate Income Tax.

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