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V1578-25 8 September 2025 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · fusión por absorción

Absorption merger of a fully owned subsidiary may qualify for fiscal neutrality

A consultancy raises whether a merger by absorption of a wholly owned subsidiary can apply the special regime of fiscal neutrality. The DGT responds that if the transaction meets commercial requirements and Article 76.1.c) of the LIS, it may qualify for such regime, provided the main objective is not tax fraud or evasion.

The question raised

Whether the merger transaction could qualify for the special tax regime provided for in Chapter VII of Title VII of Law 27/2014, of December 27, on Corporate Income Tax, and in particular, whether the reasons stated can be considered economically valid.

The DGT's ruling

If the transaction is carried out within the commercial scope according to Royal Decree-Law 5/2023 and complies with Article 76.1.c) of the LIS, the tax neutrality regime of Chapter VII of Title VII of the LIS may be applied. In the event of an improper merger with 100% participation, no income shall be recognized for the cancellation of the participation pursuant to Article 82.1 of the LIS. The absorbing entity shall subrogate into the negative tax bases of the absorbed entity subject to the limits of Articles 84.2 and DT 16th of the LIS. The regime shall not apply if the primary objective is tax fraud or evasion, pursuant to Article 89.2 of the LIS.

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