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V0535-20 5 March 2020 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · fusión inversa

Reverse mergers may qualify for special regime if based on valid economic grounds rather than tax purposes

A company has queried whether a reverse merger following an acquisition via a holding company can qualify for the special merger regime and how this affects tax consolidation. The DGT has ruled that this is possible provided commercial and economic requirements are met, and provides details on the treatment of debt and reserves.

The question raised

1) Whether the described transaction could qualify for the tax regime provided for in Chapter VII of Title VII of Law 27/2014, of November 27, on Corporate Income Tax (LIS).

The DGT's ruling

The transaction may qualify for the special merger regime if it is carried out within a commercial framework and responds to valid economic motives, rather than a merely tax-driven purpose. In the event of the dissolution of a tax group due to a change in the dominant entity, the rules for the integration of taxable bases, financial expenses, and tax losses from Article 74.3 of the LIS shall apply. Financial expenses arising from acquisition debt shall be subject to the limits set forth in Articles 16, 63.a, and 67.b of the LIS. The distribution of merger reserves corresponding to capital or share premium maintains its original tax treatment, and does not constitute income in the shareholder's taxable base.

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