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V0151-21 2 February 2021 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · régimen especial de fusiones

Mergers may qualify for special regime if driven by valid economic reasons rather than tax advantages

A company has requested clarification on whether the absorption of another entity qualifies for the special merger regime and if its economic motives are considered valid. The DGT indicates that the operation may qualify if it meets both commercial and tax requirements, provided the objective is not tax fraud or evasion.

The question raised

1. Whether the projected transaction can qualify for the special tax regime regulated in Chapter VII of Title VII of Law 27/2014, of November 27, on Corporate Income Tax and whether the economic reasons can be considered valid for the purposes of applying the special regime.

The DGT's ruling

To apply the special merger regime, the transaction must comply with the terms of Article 76.1 of the LIS and be carried out for valid economic reasons, such as the restructuring or rationalization of activities. Article 89.2 of the LIS prevents the use of this regime if the primary objective is to obtain a tax advantage. The existence of tax loss carryforwards in the absorbing company does not invalidate the regime if the activities are maintained and the mere purpose is not to offset them. The alleged economic reasons could be considered valid, although their application depends on the assessment of the facts.

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