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V2563-14 1 October 2014 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · régimen especial de fusiones

Property company mergers may qualify for special tax regime if valid economic reasons exist

A Luxembourg company proposes the merger of two Spanish real estate companies with negative taxable bases. The DGT examines whether the transaction meets the conditions of the special merger regime and whether the restructuring has valid economic grounds.

The question raised

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

The DGT's ruling

The transaction may qualify for the special merger regime of the TRLIS if it is carried out within a commercial framework and complies with Article 83.1. The reasons of reorganization, management simplification, and financial efficiency are considered economically valid, even in the presence of negative tax bases. Regarding VAT, the transfer of leased real estate shall not be subject to tax if an autonomous economic unit with an organizational structure is transferred. The transfer of shares by a resident shareholder in Luxembourg could be taxed in Spain under the Non-Resident Income Tax if the assets of the companies are primarily real estate.

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