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V0921-15 25 March 2015 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · fusión por absorción

A merger by absorption of a fully owned entity may qualify for IS special regime

A consulting company proposes an improper merger involving the absorption of an entity it fully owns. The DGT states that if the operation meets commercial law requirements, the special IS regime may apply provided there are valid economic grounds.

The question raised

Question posed: Whether the described operation may benefit from the special tax regime of Chapter VII of Title VII of Corporate Tax Law 27/2014, of November 27.

The DGT's ruling

The merger operation of a wholly owned subsidiary may benefit from the special regime of Chapter VII of Title VII of Law 27/2014, provided that it meets the merger requirements established in commercial law. Resident partners in Spain shall not include in their tax base the income arising from the attribution of values of the acquiring entity, and the values received shall be valued at the tax value of those delivered. 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.

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