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V0648-14 10 March 2014 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · fusión

Mergers and demergers may qualify for special tax regime if commercial, business line and economic motive requirements are met

The taxpayer asks whether a merger followed by a partial demerger can qualify for the special Corporate Tax regime and if the underlying motives are valid. The DGT rules that this depends on meeting commercial requirements and ensuring the segregated entities constitute autonomous business lines with valid economic motives.

The question raised

Whether the proposed restructuring operations could qualify for the special tax regime regulated in Chapter VIII of Title VII of the consolidated text of the Corporate Income Tax Law. And whether the economic motives can be considered valid for the purposes of applying the aforementioned special regime.

The DGT's ruling

For mergers and partial demergers to qualify for the special regime of the TRLIS, they must comply with the requirements of commercial law. In a demerger, the transferred and retained elements must constitute business branches, understood as autonomous economic units capable of operating by their own means. The motives for the operation must be economic (such as the rationalization of activities) and must not have fraud or tax evasion as their primary purpose. The existence of a distinct management and organization is a matter of fact that must be proven.

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