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V1224-18 10 May 2018 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · régimen especial de fusiones

Mergers may qualify for special Corporation Tax regime if carried out for valid economic reasons

A company enquired whether the merger of its subsidiary could qualify for the special Corporation Tax regime by citing economic motives. The DGT indicates that if the transaction meets commercial and tax requirements, and is justified by reasons of rationalisation or restructuring, said regime may apply.

The question raised

Possibility that the aforementioned transaction 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, due to the existence of a valid economic reason.

The DGT's ruling

To apply the special merger regime, the transaction must comply with the provisions of the Structural Changes Law and Article 76.1 of the Corporate Income Tax Law (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 structural simplification, cost savings, economies of scale, and improved management may be considered economically valid pursuant to Article 89.2 of the LIS.

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