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V0422-16 3 February 2016 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · régimen especial de fusiones

Mergers may qualify for special Corporate Tax regime if commercial requirements and valid economic reasons are met

A holding company proposes a merger by absorption and a reverse merger to rationalise costs and centralise management. The DGT rules that these operations may apply the special Corporate Tax regime provided they comply with commercial regulations and have valid economic reasons, although it warns of potential VAT liability on the transfer of real estate if the transferring entities lack an autonomous organisational structure.

The question raised

Question posed: Whether the proposed operation could qualify for the special tax regime regulated in Chapter VII of Title VII of the Corporate Income Tax Law. And whether the economic reasons can be considered valid for the purposes of applying the aforementioned special regime.

The DGT's ruling

Merger operations may qualify for the special regime under Chapter VII of the LIS if they are carried out within a commercial scope pursuant to Law 3/2009 and comply with the requirements of the LIS. The alleged reasons of cost rationalization and economies of scale are considered economically valid under Article 89.2 of the LIS. However, regarding VAT, the transfer of leased real estate or land could be considered a mere assignment of assets and be subject to tax if the transferor lacks sufficient human or material resources for an autonomous activity.

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