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V0853-20 14 April 2020 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · régimen especial de fusiones

A merger may qualify for special regime if valid economic reasons exist

A insurance company asks whether a merger by absorption of a subsidiary can apply for the special reorganisation regime. The DGT states that it is possible if the operation is based on valid economic grounds and does not primarily aim at tax fraud or fiscal advantage.

The question raised

Whether, given the described economic reasons, the described transaction may qualify for the special regime for mergers, demergers, asset contributions, exchange of securities, and change of registered office of a European Company or a European Cooperative Society from one Member State to another within the European Union, as provided for in Chapter VII of Title VII of Law 27/2014, of November 27, on Corporate Income Tax.

The DGT's ruling

The transaction may qualify for the special regime if carried out under the Structural Changes Law and complies with Article 76.1.c) of the Corporate Income Tax Act (LIS). The alleged economic reasons could be valid, although this depends on the facts. The existence of tax loss carryforwards does not prevent the regime, provided that the activities are maintained and this is not the predominant purpose. The absorbing company subrogates into the tax loss carryforwards subject to the limits of Articles 84.2 and the 16th Additional Provision of the LIS.

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