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V1768-19 10 July 2019 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · régimen especial de fusiones

Merger of a wholly-owned subsidiary may qualify for special regime if it complies with company law

The applicant asks whether the merger of a company wholly owned by another may qualify for the special Corporate Tax regime and if its economic motives are valid. The DGT indicates that if the transaction meets the requirements of company law, it may qualify for the tax regime, provided its primary purpose is not fraud or tax advantage.

The question raised

Whether the described operation would objectively qualify within the special regime provided for in Chapter VII of Title VII of Law 27/2014, of November 27, on Corporate Income Tax, and whether the noted economic reasons are sufficient for the purposes of Article 89.2 of said Law.

The DGT's ruling

The merger operation may qualify for the special regime under Chapter VII of Title VII of the Corporate Income Tax Act if it meets the requirements for a merger by absorption established in commercial law. To apply this regime, the operation must not have fraud or tax evasion as its primary objective, but must be carried out for valid economic reasons. Reasons such as structural simplification, rationalization of activities, reduction of administrative complexity, and improvement of solvency could be considered economically valid, although their validity depends on the verification of the facts.

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