Taxpayers may contribute economic activities to a company with tax neutrality

The Directorate General of Taxes (DGT) has addressed the feasibility of applying the tax neutrality regime to operations involving the contribution of economic activities to a company. This issue is key for those taxpayers seeking to transform their business structure without generating an immediate tax burden under Personal Income Tax (IRPF).

What the DGT has resolved

The advisory body establishes that the contribution of business branches is considered a restructuring operation. Therefore, it may benefit from the special regime provided for in Chapter VII of Title VII of the Corporate Income Tax Law (LIS), provided that the requirements of Article 87 of said law are met.

Regarding the motivation for the operation, the DGT points out that limiting personal and asset liability constitutes a valid economic reason. However, this objective must not be the primary purpose of the operation for the purpose of tax fraud or evasion. In the specific case of real estate, strict conditions have been set:

• The leasing activity must constitute a real economic activity, having at least one full-time employee.
• The contributed assets must have been used for the activity for a minimum period of three years.
• The accounting must comply with the Commercial Code since, at least, the fiscal year prior to the contribution.

What it means for you

If you are an individual carrying out an economic activity, you have the possibility of transferring said activity to a company without the operation being included as income in your IRPF tax return. This allows for a transition toward a corporate structure while maintaining the continuity of the values and the seniority of the contributed elements.

For the receiving company, the operation implies the obligation to maintain commercial accounting and the seniority of the received assets, which ensures the continuity of the economic structure following the restructuring.

What should be done

Since the application of tax neutrality depends on strict compliance with technical requirements and the nature of the activity, it is necessary to perform a prior analysis of the accounting and operational situation. It must be verified that the leasing activity, if it exists, meets the required personnel and time thresholds, and that the economic motivation is solid and justifiable before the Administration.