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V0988-15 27 March 2015 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · fusión por absorción

A fully owned subsidiary merger may qualify for special tax regime if valid economic reasons exist

A parent company queries whether the absorption merger of a fully owned subsidiary may apply for the special tax regime. The DGT confirms it is possible if the transaction meets commercial requirements and has valid economic objectives, not merely tax advantages.

The question raised

Whether the described transaction may qualify for the special tax regime under Chapter VII of Title VII of Corporate Income Tax Law 27/2014, of November 27.

The DGT's ruling

The transaction may qualify for the special merger regime if it meets the requirements for merger by absorption established in commercial law. The economic motives presented, such as fulfilling banking commitments or avoiding prohibited financial assistance, are considered valid to prevent the application of Article 89.2 of the Corporate Income Tax Act. In this case, resident partners in Spain shall not include in their tax base the income from the attribution of securities, and these shall be valued at their tax value.

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