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V0318-21 22 February 2021 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · fusión por absorción

Merger by absorption may qualify for the special Corporate Income Tax regime if commercial requirements are met and valid economic reasons exist

The DGT states that a merger by absorption may apply for the special corporate tax regime if it meets commercial and fiscal requirements, provided its main purpose is not to obtain a fiscal advantage.

The question raised

If they are understood to be included in the tax regime provided for in Chapter VII of Title VII of Law 27/2014, of November 27, on Corporate Income Tax, how many tax contingencies arise from the dissolution of the group entities as a consequence of the proposed operation, regarding Corporate Income Tax, Personal Income Tax, and Real Estate Capital Gains Tax.

The DGT's ruling

To apply the special Corporate Income Tax regime, the merger must be carried out in accordance with the Law on Structural Modifications and comply with Article 76.1 of the Corporate Income Tax Law. Shareholders resident in Spain shall not recognize income from the attribution of values and shall maintain the tax values of the assets transferred. The regime shall not apply if the primary objective of the transaction is tax fraud or evasion without valid economic reasons. The non-accrual of the Transfer Tax on Urban Land (IIVTNU) is conditional upon the transfer of urban land deriving from operations applicable to the special regime of the Corporate Income Tax Law.

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