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V0440-14 18 February 2014 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · régimen especial de fusiones

Fusions with valid economic motives may qualify for special tax regime despite negative taxable bases

The DGT confirms that a new company resident in the common territory may apply the special fusion regime if the operation has valid economic motives, and if foral negative taxable bases can be offset under common tax rules.

The question raised

Whether the application of the special regime of Chapter VIII of Title VII of the consolidated text of the Corporate Income Tax Law is appropriate for the proposed mergers. And whether the alleged motives are considered economically valid for these purposes. Whether the difference in the taxation regime between the absorbed entities and the absorbing company implies any limitation or whether specific tax aspects must be taken into account.

The DGT's ruling

Mergers may qualify for the special regime of the TRLIS if they are carried out within a commercial scope and fulfill the requirements of Article 83.1. The operation must not have the primary purpose of fraud or tax advantage, but rather valid economic motives such as the rationalization of activities. Negative tax bases generated under regional law may be offset in the absorbing entity subject to common law, respecting the limits of the original law.

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