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V5111-16 25 November 2016 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · canje de valores

Value exchange regime may allow tax consolidation in international expansion

A Spanish company seeks to expand by establishing a UK subsidiary, transferring its holdings in other Spanish subsidiaries. The DGT examines whether this value exchange qualifies for the LIS special regime and whether it affects tax consolidation.

The question raised

1) Whether the described transaction may benefit from 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

The transaction may apply the special regime for exchange of shares if the beneficiary entity acquires the majority of voting rights and the requirements of Article 80 of the LIS are met. Reasons of expansion, centralization of resources, and obtaining external financing are considered valid economic reasons pursuant to Article 89.2 of the LIS. The tax consolidation regime is maintained if the Spanish entity retains its status as a parent company indirectly. The exemption for double taxation under Article 21 of the LIS is applicable if the requirements regarding participation and acquisition value are met.

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