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V1852-19 16 July 2019 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · fusión

Merger by absorption of a wholly-owned subsidiary may qualify for the special Corporate Income Tax regime

A query was raised regarding whether a merger operation can apply the special regime of the Corporate Income Tax Act and if valid economic reasons exist. The DGT indicates that if commercial regulations and Article 76.1.c) of the CIT Act are met, said regime could apply, provided its primary purpose is not tax fraud or tax advantage.

The question raised

Whether the described transaction may benefit from 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

To benefit from the special regime, the transaction must be carried out within the commercial sphere pursuant to Law 3/2009 and comply with Article 76.1.c) of the LIS. The regime shall not apply if the primary objective is tax fraud or evasion, or if there are no valid economic reasons such as the restructuring or rationalization of activities. Reasons of efficiency, centralization, and concentration of economic capacity could be considered valid, although their classification depends on the facts.

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