Proportional total demergers may qualify for tax neutrality

The Dirección General de Tributos (DGT) has clarified the tax treatment applicable to total demerger operations when these are carried out proportionally. This criterion is relevant for companies seeking to restructure their corporate composition without the operation resulting in an immediate tax impact in terms of capital gains.

What the DGT has resolved

The tax authority establishes that a proportional total demerger operation may qualify for the tax neutrality regime provided for in Chapter VII of Title VII of the Corporate Tax Law (LIS), provided it is carried out within the commercial sphere in accordance with Royal Decree-Law 5/2023.

A key point of the resolution is that, as the shareholders' participation proportion is maintained in the new entities, it is not mandatory for the assets subject to demerger to constitute distinct business lines. Likewise, the DGT validates as valid economic reasons those aimed at resolving deadlocks, succession, or the execution of business strategies, provided they are connected to the continuity of the activity. However, the regime is excluded if the main objective of the operation is fraud or tax evasion.

What this means for you

For companies, this interpretation allows for the execution of total demerger processes without the transferring or acquiring companies having to include capital gains in their tax base. This facilitates the reorganization of groups or corporate structures without generating an immediate tax burden.

Regarding shareholders resident in Spain, the operation has a positive indirect impact, as they will not include income in their tax base due to the attribution of values, since the original tax values of the assets are maintained.

What should be done

In the event of a possible restructuring, it is necessary to exhaustively document the economic reasons justifying the operation, such as business strategy or the resolution of deadlocks. It is fundamental to ensure that the demerger is carried out under the parameters of Royal Decree-Law 5/2023 to guarantee access to the neutrality regime and to prevent the administration from considering that there is an intent of tax evasion. Each demerger scenario must be analyzed individually to confirm compliance with legal requirements.