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V1900-19 19 July 2019 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · régimen especial de fusiones

Subsidiary merger may qualify for special regime if carried out for valid economic reasons

An entity enquired whether the merger of its subsidiary, of which it owns 100% of the capital, could apply the special tax regime for mergers. The DGT indicates that to do so, it must meet both commercial and tax requirements, and that the primary purpose of the operation must not be tax advantage.

The question raised

Whether the described transaction may qualify for the special tax regime provided for in Chapter VII of Title VII of Law 27/2014, of November 27, on Corporate Income Tax.

The DGT's ruling

To apply 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 concerning management rationalization and operational efficiency could be considered valid, although their classification depends on the actual facts of the transaction.

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