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V0033-15 9 January 2015 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · régimen especial de fusiones

Mergers by absorption may qualify for special tax regime if valid economic reasons exist

A family-owned company inquired whether the absorption of another company within the same group could qualify for the special merger regime without incurring tax on capital gains. The Directorate General for Taxes (DGT) ruled that reasons related to administrative and operational rationalisation constitute valid economic grounds, thereby allowing the application of the special regime.

The question raised

Question posed: Whether the proposed restructuring operation could qualify for the special tax regime regulated in Chapter VII of Title VII of the Corporate Income Tax Law. Whether the economic motives can be considered valid for the purposes of applying the aforementioned special regime. And specifically, whether the realized capital gains would not be included in the Corporate Income Tax base, nor in the Personal Income Tax base of the shareholders, all of whom are residents in Spanish territory.

The DGT's ruling

The transaction may qualify for the special merger regime if it is carried out within a commercial framework and meets the requirements of the TRLIS or the LIS. Motives of organizational rationalization, unification of accounting systems, and commercial coordination are considered valid economic motives. The existence of tax loss carryforwards in the absorbed company does not invalidate the regime if the predominant purpose of the transaction is not their exploitation. Under this regime, income from transfers and income from shareholders are not included in the tax base.

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