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V1760-20 3 June 2020 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · fusión por absorción

Merger by absorption may qualify for special regime if valid economic reasons exist

A query was raised regarding whether a merger by absorption between two companies held by the same entity can apply the special regime under the Corporate Income Tax Act (LIS) and if the stated reasons are valid. The DGT indicates that the operation could qualify for said regime if it meets commercial and tax requirements, provided its primary purpose is not tax advantage.

The question raised

Whether the described operations may qualify for the tax regime provided for in Chapter VII of Title VII of Law 27/2014, of November 27, on Corporate Income Tax and whether valid economic reasons exist.

The DGT's ruling

The operation may qualify for the special regime if carried out under the Structural Changes Law and complies with Article 76.1 of the Corporate Income Tax Law (LIS). The reasons for simplification and rationalization could be economically valid, provided that the predominant purpose is not the exploitation of tax loss carryforwards. The existence of tax loss carryforwards in the absorbing company does not invalidate the regime if the activities are maintained and there is no liquidation plan. The offsetting of the absorbed company's tax losses in the absorbing company shall be subject to the limits set forth in Articles 84 and the 16th Additional Provision of the LIS.

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