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V2614-20 31 July 2020 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · régimen especial de fusiones

Mergers may qualify for special regime if valid economic reasons exist and are not for fraud

The applicant asks whether a restructuring of their real estate trading companies can qualify for the special merger regime. The DGT indicates that if the operation meets commercial and tax requirements and has valid economic reasons, it could apply, although the existence of tax loss carryforwards is not sufficient grounds on its own.

The question raised

1. Whether the special tax regime provided for in Chapter VII of Title VII of Law 27/2014, of November 27, on Corporate Income Tax is applicable to the proposed restructuring transaction and whether valid economic reasons exist.

The DGT's ruling

To apply the special merger regime, the transaction must comply with the requirements of the Law on Structural Modifications and Article 76.1 of the Corporate Income Tax Law (LIS). It shall not apply if the primary objective is tax fraud or evasion, or if it lacks valid economic reasons such as the rationalization of activities. The existence of tax loss carryforwards does not invalidate the regime if the activities are maintained and it is not the preponderant purpose of the merger. The offsetting of such tax losses shall be subject to the limits set forth in Articles 84 and DT 16 of the LIS.

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