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V0710-18 16 March 2018 · SG de Impuestos sobre el Consumo Criterion in force
IVA · unidad económica autónoma

Merger by absorption is exempt from VAT, but prior transfer of staff and assets is subject to it

An entity sought clarification on the VAT treatment of a restructuring involving the transfer of staff and assets, followed by a merger by absorption. The DGT determined that the merger is not subject to VAT as it constitutes a transfer of an economic unit, whereas the prior transfer is taxable as it is merely a transfer of assets.

The question raised

Liability for Value Added Tax of both operations.

The DGT's ruling

The transfer of an autonomous economic unit through merger by absorption is not subject to VAT pursuant to Article 7.1 of Law 37/1992. However, the transfer of personnel and tangible assets that does not constitute an autonomous economic unit with an organizational structure of production factors is considered a mere transfer of goods and rights. In this second case, the transaction is subject to tax and each element must be taxed independently.

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