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V0497-14 25 February 2014 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · fusión por absorción

Special merger regime applicable to mergers between companies with a single common shareholder

An entity has requested clarification on whether a merger by absorption involving a company wholly owned by the same shareholder can qualify for the special tax regime. The Directorate General for Taxes (DGT) has ruled that this is possible, provided that commercial requirements are met and valid economic reasons exist.

The question raised

1) Whether the described operation may benefit from the special tax regime of Chapter VIII, Title VII of the Recast Text of the Corporate Income Tax Law approved by Royal Legislative Decree 4/2004, of March 5.

The DGT's ruling

In mergers between companies wholly owned by the same shareholder, the allocation of shares is not necessary to achieve tax neutrality, as the shareholder's equity position does not change substantially. The operation may apply the special regime of Chapter VIII of the TRLIS provided that it complies with commercial regulations and does not have fraud or tax evasion as its primary objective. The fact that the absorbed company has negative tax bases does not invalidate the regime if the activities are maintained and economic efficiency is sought. The application of the regime implies that income is not integrated into the transferring company and that the values and seniority of the assets are maintained in the acquiring company.

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