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V2696-14 9 October 2014 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · fusión por absorción

Mergers by absorption may qualify for special Corporate Tax regime if valid economic reasons exist

The requesting entity asks whether a merger by absorption can apply the special Corporate Tax regime and if the transfer of industrial buildings is exempt from VAT. The DGT rules that the merger may apply the special regime if it serves economic purposes rather than solely tax-driven ones; however, the transfer of buildings alone does not constitute an autonomous economic unit and is therefore subject to VAT.

The question raised

1) Whether the described transaction can qualify for the special tax regime of Chapter VIII, Title VII of the Recast Text of the Corporate Income Tax Law approved by Royal Legislative Decree 4/2004, of March 5.

The DGT's ruling

To apply the special merger regime for Corporate Income Tax, the transaction must be carried out for commercial purposes and comply with Article 83.1 of the TRLIS with valid economic reasons. The existence of negative tax bases does not prevent the regime if activities are maintained and the equity position is strengthened. Regarding VAT, the transfer of industrial buildings does not benefit from non-taxability due to business transfer if they do not constitute an autonomous economic unit capable of carrying out an activity on its own.

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