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V1460-22 21 June 2022 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · fusión por absorción

Merger by absorption may qualify for special regime if commercial requirements are met and valid economic reasons exist

A company has enquired whether its proposed merger by absorption can benefit from the special merger regime under the Corporate Income Tax Act (LIS). The Directorate General for Taxes (DGT) indicates that the transaction must be carried out under the Structural Changes Act and comply with Article 76.1 of the LIS, ensuring that its primary purpose is not to obtain a tax advantage.

The question raised

Whether the merger by absorption transaction described complies with all legal requirements, including the valid economic reason, and can therefore be subject to the application of the special regime for mergers, demergers, contributions of assets, exchange of securities, and change of registered office of a European Company or a European Cooperative Society from one Member State to another of the European Union as provided for in Chapter VII of Title VII of Law 27/2014, of November 27, on Corporate Income Tax.

The DGT's ruling

To apply the special regime, the transaction must be carried out within a commercial scope pursuant to Law 3/2009 and comply with Article 76.1 of the LIS. Furthermore, it must be supported by valid economic reasons, such as the restructuring or rationalization of activities, to prevent the primary objective from being tax fraud or evasion pursuant to Article 89.2 of the LIS. Reasons of management simplification and resource optimization could be considered valid, although their application depends on the assessment of the facts.

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