Total spin-offs may qualify for tax neutrality without the need for business lines

The restructuring of companies through total spin-offs has raised doubts regarding the necessity for the transferred assets to strictly correspond to independent business lines. The recent resolution from the Dirección General de Tributos (DGT) clarifies the scope of tax neutrality in these operations.

What the DGT has resolved

The tax authority has determined that a total spin-off operation may qualify for the tax neutrality regime provided for in Articles 76 to 89 of the Corporate Income Tax Law (LIS) if it is carried out within a commercial framework, in accordance with Royal Decree-Law 5/2023.

One of the key points of the resolution is that, as it involves a proportional attribution of shares to the shareholders, it is not an indispensable requirement for the assets subject to the spin-off to constitute business lines. Under these conditions, the following effects are met:

• Income derived from the operation will not be included in the tax base of the transferring company or the acquiring companies.
• Shareholders will maintain the tax values of the shares they originally held.

However, the DGT warns that this deferral regime will not be applicable if it is determined that the primary objective of the operation is tax fraud or evasion.

What this means for you

For companies, this criterion provides greater flexibility in planning asset restructurings. The possibility of applying tax neutrality without the strict requirement of the existence of business lines allows for corporate movements with a deferred tax impact, avoiding the immediate inclusion of income in the Corporate Income Tax base.

Regarding individual shareholders, the resolution confirms that the transfer of shares under this scheme allows for the maintenance of the tax values of their assets, which avoids an immediate tax impact on Personal Income Tax (IRPF).

What should be done

Since the application of this regime depends on the commercial nature of the operation and the absence of fraudulent purposes, it is necessary to analyze the economic substance of the spin-off. Each restructuring must have a clear operational justification that supports the intended tax neutrality and ensures compliance with current regulations.