Real estate received in a spin-off will have the market value set by the Tax Inspection

The determination of the acquisition value of assets following a spin-off process has raised doubts regarding the tax base that will be applied in future transfers. The General Directorate of Taxes (DGT) has issued a ruling that precisely defines how this value must be calculated when the Administration intervenes in the process.

What the DGT has resolved

The inquiry analyzes whether the tax value of a property should be increased to reach the normal market value that the tax administration attributes at the time of regularization. This scenario occurs when the Tax Inspection determines that the special tax regime for spin-offs is not applicable, forcing taxation on the income derived from the operation.

The DGT concludes that the tax acquisition value of the real estate will, indeed, be the normal market value determined by the Tax Inspection during the regularization. To calculate the income produced in a future transfer, said tax value must be used, from which the depreciation that has been tax-deductible during the holding period shall be subtracted.

A relevant aspect of the resolution is that this calculation is independent of whether the entity made negative extra-accounting adjustments for the difference between tax and accounting depreciation.

What it means for you

For companies participating in spin-off processes, this criterion implies that the book value of the received assets will not necessarily be the tax value used to calculate the profit in a subsequent sale. If the Tax Inspection rectifies the operation and sets a higher market value, that will be the new tax starting point.

This directly affects the planning of the tax burden in the future disposal of the asset, as the acquisition value will be higher, but the impact of accumulated deductible depreciation must also be considered.

What should be done

In a spin-off where there is a risk that the Administration may not recognize the special regime, it is necessary to assess the impact of a possible regularization on the value of the assets. It is recommended to analyze the difference between the book values and the market values that the Tax Inspection could attribute, to understand how this will affect the tax base of Corporate Income Tax (Impuesto sobre Sociedades) at the time of the transfer of the assets.