The Supreme Court of Castilla y León has recently issued a Resolution confirming the direct application of the Merger Directive and accepting the application of the tax deferral regime to a total non-proportional spin-off of assets that do not qualify as a differentiated “line of businesses” at the spun-off company.
This is a very relevant Resolution as it allows reorganizing family groups in a more optimal and simple way. This judgment confirms that the Spanish legislation is contrary to EU law, in line with the complaint filed against Spain by the Commission in 2018 and with the dissenting opinion issued by Excmo. Sr. Huelin in the judgment of the SC of July 20, 2014.
The judgment is very complete, also echoing the relevance of the procedural aspects such as, the right to defense of the taxpayer in time and form, a fact that is sufficient in itself to annul the settlement issued by the Inspection. In addition, and in relation to the valid economic reasons, the ruling confirms that the existence of reasons is not a requirement for the application of the special regime, but that their absence is an indication of fraud.
Admitting that neither the only nor the main purpose of the spin-off was to obtain a tax advantage (which is implicit in the regime itself), the analysis of the reasons for the spin-off is irrelevant.
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