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V2708-14 9 October 2014 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · régimen especial de fusiones

Special merger regime requires valid economic reasons, not fiscal or liquidation motives

A company asked whether a merger by absorption of a subsidiary could benefit from the special tax regime for reorganisations. The DGT replied that, although the transaction meets commercial and legal requirements, the regime will not apply if the operation lacks valid economic justification.

The question raised

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

The DGT's ruling

To apply the special merger regime, the transaction must be carried out for valid economic reasons, such as the restructuring or rationalization of activities, and not merely for the purpose of obtaining a tax advantage. In this case, no economic purpose justifying the regime is observed, as the objective appears to be facilitating the liquidation of the absorbed entity within the absorbing entity.

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