Back to index
V0319-16 27 January 2016 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · fusión por absorción

Absorption merger may qualify for IS special regime if valid economic reasons exist

A real estate company asks whether its absorption merger with a family business can apply to the IS special regime and the implications for VAT and ITP/AJD. The DGT states that the restructuring motives are economically valid, but warns that the transfer of isolated assets does not constitute an autonomous economic unit for VAT exemption.

The question raised

1) Whether the described operation may qualify for the special tax regime provided for in Chapter VII of Title VII of Law 27/2014, of November 27, on Corporate Income Tax. Tax implications derived from the non-application of the aforementioned tax regime.

The DGT's ruling

To apply the special merger regime of the LIS, the transaction must be carried out for valid economic reasons, such as the restructuring or rationalization of activities, and not for the purpose of obtaining a tax advantage. Regarding VAT, the transfer of a warehouse and cash does not constitute an autonomous economic unit, and therefore is taxed as a mere transfer of assets. In ITP/AJD, the merger is considered a restructuring operation, which entails non-subjectivity in the form of corporate operations and exemption in others. Regarding IIVTNU, the non-accrual depends on the concurrence of the circumstances set forth in the second additional provision of the LIS.

Book your free first meeting