VAT: non-subjection of transmissions of branches of activity

The TEAC declares that in a capital reduction with return of contributions, the non-subject to VAT is not applicable if the transfer does not include goods and rights capable of autonomous operation.

In a capital reduction operation with the return of contributions to the partners in the form of the transfer of lots, the possible application of the non-subjection contemplated by the LIVA article 7.1º for the transfer of autonomous economic units is discussed.

The Court, to analyze the matter, is based on the interpretation of the cases of non-subjection referred to in the LIVA article 7.1º in accordance with the jurisprudence of the Court of Justice of the European Union established in CJEU 11-27-03, Zita Modes case C-497/01 and CJEU 10-11-11, Christel Schriever case C-444/10.

According to the interpretation of the CJEU, the contribution not subject to a company of a total or partial universality of goods must be understood in the sense that it includes the transfer of a commercial establishment or of an autonomous part of a company, with corporal elements and, in where appropriate, incorporeal that, together, constitute a company or a part of a company capable of developing an autonomous economic activity, but which does not include the mere transfer of assets, such as the sale of inventories.

In the case contemplated, it is alleged that the acquiring company is not a mere holding entity and that it carries out an economic promotion activity, its intention being to use the plots for its economic activity. Said requirement, the TEAC points out, is necessary but not sufficient, since the norm requires that what is transmitted be an autonomous unit capable of operating by its own means. The existence and transmission of an economic exploitation is therefore a condition, that is, of a set of personal and material means that by themselves constitute a business organization necessary for the development of the activity that is transmitted and that allows it to continue at the headquarters of the acquirer.

The complaining entity has not justified that the transmissions of sites have been accompanied by the transmission of an organizational structure of material and human factors of production or one of them. Nor has it been justified that human or material resources have been provided, but rather that the transmission was limited to the delivery of lots, which by themselves do not constitute an autonomous economic unit, the fact that the transmission took place being irrelevant. in the context of a capital reduction with return of contributions.