Partial demergers involving capital reductions cannot apply tax neutrality

A recent resolution from the Directorate General of Taxes (DGT) focuses on the correct classification of corporate restructuring operations. The body has analyzed whether an operation involving the transfer of assets from a company to its shareholders, through a capital reduction, can benefit from the special tax neutrality regime provided for in the Corporate Income Tax Law (LIS).

What the DGT has ruled

The inquiry asked whether a partial demerger operation, in which the company transfers isolated assets to two of its shareholders and reduces its capital affecting only these shareholders, could qualify for the special regime for mergers, demergers, and contributions of business lines under Law 27/2014.

The DGT has ruled that the operation does not meet the requirements of Article 76.2.1º letter b) of the LIS. The Administration's criterion is that, as it is not a partial demerger according to the regulations, the operation does not fit into Chapter VII of Title VII of the LIS. Instead, the tax authority considers that the described structure is identified as a capital reduction with a return of contributions to the shareholders.

What this means for you

For companies considering restructurings through the delivery of assets to shareholders, this criterion is decisive. If the operation is not strictly classified as a partial demerger under the parameters of the LIS, the company will lose the possibility of applying the tax neutrality regime.

This implies that the transfer of the company's assets could be subject to ordinary Corporate Income Tax (IS) taxation, instead of deferring the tax impact through the special restructuring regime. The distinction between a real demerger and a mere return of contributions through assets is the critical point that determines the tax burden of the operation.

What should be done

When facing a corporate restructuring, it is necessary to verify that the transfer of assets meets the legal requirements for a partial demerger to avoid tax contingencies. It is essential to ensure that the operation is not interpreted as a capital reduction with the delivery of goods, as this would nullify the tax neutrality benefits that Law 27/2014 offers to companies.