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V1200-14 29 April 2014 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · fusión impropia

Special merger regime may apply if the transaction is driven by valid economic reasons

A company has requested clarification on whether an improper merger may qualify for the special tax regime. The DGT has ruled that this is possible provided the merger meets commercial requirements and is carried out for valid economic reasons rather than purely for tax purposes.

The question raised

1) Whether the described operation may qualify for the special tax regime under Chapter VIII, Title VII of the Consolidated Text of the Corporate Income Tax Law approved by Royal Legislative Decree 4/2004, of March 5.

The DGT's ruling

The operation may qualify for the special regime under Chapter VIII of Title VII of the TRLIS if it meets the merger requirements according to commercial law. The application requires that the operation's primary objective is not tax fraud or evasion, but rather valid economic motives such as the restructuring or rationalization of activities. The fact that the absorbed companies have negative tax bases or are inactive does not in itself invalidate the regime, provided that the activities are maintained and the compensation limits of Article 90.3 and the forty-first transitional provision of the TRLIS are met.

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