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V4911-16 14 November 2016 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · aportaciones no dinerarias

Requirements for non-monetary contributions under the LIS special regime (Art. 87 and 89 LIS)

A taxpayer asks whether contributions of shares in several entities to a new company (NEWCO) can qualify for the LIS special regime. The DGT states that this is possible provided the participation and activity requirements are met, and the transaction is not primarily aimed at tax fraud or avoidance.

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 Law. And whether the economic reasons can be considered valid for the purposes of applying the aforementioned special regime.

The DGT's ruling

In order for the contribution of shares to qualify for the special regime under Chapter VII of Title VII of the LIS, the requirements of Article 87 must be met, such as the residence of the beneficiary entity, the minimum participation of 5% in equity, and the uninterrupted ownership of the shares during the previous year. Furthermore, pursuant to Article 89.2, the transaction must respond to valid economic reasons and must not have the primary objective of obtaining a tax advantage. Reasons of efficient management, channeling of investments, and separation of risks are considered economically valid.

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