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V1273-16 29 March 2016 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · neutralidad fiscal

Operational simplification and cost savings deemed valid economic reasons for tax neutrality in mergers

The applicant asks whether a merger by absorption can qualify for the special tax neutrality regime and if its economic motives are valid. The DGT rules that if the transaction meets the requirements of the Corporate Income Tax Law and the Structural Changes Law, and is carried out for valid economic reasons rather than solely to obtain a tax advantage, the regime may be applied.

The question raised

Question posed: Whether, with the additional information provided, the proposed transaction could benefit from the special tax regime regulated in Chapter VII of Title VII of the Corporate Income Tax Law. And whether the economic reasons can be considered valid for the purposes of applying the aforementioned special regime.

The DGT's ruling

To benefit from the special merger regime, the transaction must be carried out within a commercial scope pursuant to Law 3/2009 and comply with the requirements 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. In this case, the reasons of operational simplification, cost savings, economies of scale, and balance sheet strengthening are considered economically valid according to Article 89.2 of the LIS.

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