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V1679-14 1 July 2014 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · fusión

A merger may qualify for special tax regime if carried out for valid economic reasons rather than tax advantage

A real estate company has enquired whether its merger operation can apply the special tax regime for corporate reorganisations. The DGT has ruled that this is possible provided that commercial and tax regulations are met, and that the operation is driven by valid economic motives beyond mere tax advantage.

The question raised

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

The DGT's ruling

To apply the special merger regime, the operation must be carried out under Law 3/2009 and comply with Article 83.1 of the TRLIS. The regime shall not apply if the primary objective is tax fraud or evasion, or if it lacks valid economic motives such as the restructuring or rationalization of activities. The fact that the absorbed company is practically inactive does not prevent the application of the regime if its economic motives are valid.

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