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V1859-14 11 July 2014 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · régimen especial de fusiones

Application of special merger regime depends on valid economic grounds

A company enquired whether its merger operation could qualify for the special Corporate Tax regime and if its underlying motives were economically valid. The DGT states that while the operation must meet commercial and tax requirements, it cannot determine the validity of the motives due to a lack of data regarding assets and business activity.

The question raised

Whether the application of the special regime under Chapter VIII of Title VII of the consolidated text of the Corporate Income Tax Law is appropriate for the proposed transaction, and whether the alleged reasons are considered economically valid for these purposes.

The DGT's ruling

To benefit from the special merger regime, the transaction must be carried out within a commercial scope pursuant to 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 there are no valid economic reasons such as the restructuring or rationalization of activities. The existence of tax loss carryforwards in the absorbing company does not in itself prevent the application of the special regime. Without knowledge of the assets and the impact on the activity, the DGT cannot determine whether the transaction is economically valid.

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