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V0855-20 14 April 2020 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · régimen especial de fusiones

A merger may qualify for the special regime if carried out for valid economic reasons and not for tax advantage

An entity inquires whether its proposed merger project may apply the special Corporate Income Tax regime and whether its economic reasons are valid. The DGT indicates that if the merger complies with commercial regulations and the LIS, and is carried out for reasons of rationalization or restructuring, said regime may apply.

The question raised

Question posed: Whether the projected operation may qualify for the special tax regime regulated in Chapter VII of Title VII of Law 27/2014, of November 27, on Corporate Income Tax and whether the economic reasons may be considered valid for the purposes of applying the special regime.

The DGT's ruling

To apply the special regime, the operation must comply with the Law on Structural Modifications and Article 76.1.c) of the LIS. The regime shall not apply if the primary objective is tax fraud or evasion, or if there are no valid economic reasons such as the restructuring or rationalization of activities. Reasons of administrative simplification and the lack of economic purpose of the absorbed company could be valid, although their assessment depends on the facts. The existence of tax loss carryforwards in the absorbing company does not prevent the regime if the activities are maintained and the resulting financial situation is strengthened.

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