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V5232-16 12 December 2016 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · aportación de rama de actividad

Contribution followed by share donation excluded from LIS special regime

A lottery administration holder asks whether contributing their business activity to a company and then donating shares to their children can benefit from the LIS special neutrality regime. The DGT responds that the donation made shortly after the contribution is deemed a purely fiscal arrangement to gain tax advantages in the transfer to children, thus excluding the application of the LIS special regime.

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

The DGT's ruling

The contribution of a branch of activity may qualify for the special regime of the Corporate Income Tax Act if it constitutes an autonomous economic unit and is carried out for valid economic reasons. However, if the contribution is a preparatory operation for a subsequent donation of shares for the purpose of obtaining a tax advantage, said regime shall not apply due to the lack of real economic reasons. Regarding the donation, there shall be no capital gain in the donor's Personal Income Tax if the requirements for reduction under art. 20.6 of the LISD are met.

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