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V2589-19 ·23 September 2019 ·consulta-vinculante Medium impact
Tax

Merging an inactive company to exploit tax losses may lack valid economic reasons

A query was raised regarding whether a proposed merger could qualify for the special merger regime under the Corporate Income Tax Act (LIS) and if the stated objectives constitute valid economic reasons. The Directorate General for Taxes (DGT) indicates that if the purpose is to exploit the tax losses of an inactive company, the transaction may fail to meet the requirements for valid economic reasons.

In 6 key points

How it affects those involved

Companies attempting to restructure solely to offset tax losses through inactive entities may face rejection of tax-neutral merger treatments if they cannot demonstrate genuine economic substance.

Lifecycle

2019-09-23PublishedPublished in the BOE
Official text Based on BOE data (boe.es). Information, not advice.

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This analysis is informational only and does not constitute legal advice or create a client-adviser relationship. BM Consulting.
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