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V2079-18 13 July 2018 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · fusión

Merger could qualify for special corporate tax regime under Ley 3/2009 with valid economic reasons

A company inquired whether its subsidiary's merger could apply for the special corporate tax regime. The DGT responds that if the transaction meets commercial requirements and has valid economic grounds, it may qualify for such regime.

The question raised

Question posed: 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 merger regime, the transaction must be carried out in accordance with the Law on Structural Modifications and must aim for valid economic reasons, rather than mere tax advantage. Reasons such as resource optimization, cost reduction, and corporate simplification may be considered valid. The existence of tax loss carryforwards in the absorbed entity does not prevent the application of the regime if the transaction strengthens the activity or assets of the absorbing entity. The acquiring entity subrogates into the tax loss carryforwards subject to the limits set forth in Article 84.2 of the Corporate Income Tax Law.

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