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V2782-23 11 October 2023 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · neutralidad fiscal

Merger of a commercial company by a religious entity may qualify for tax neutrality

A religious entity that is the sole shareholder of a real estate rental company has enquired whether it can carry out a merger by absorption under the tax neutrality regime. The Directorate General for Taxes (DGT) has ruled that this is possible provided the requirements for dissolution without liquidation are met and valid economic reasons exist.

The question raised

Whether the described transaction may qualify for the tax regime provided for in Chapter VII of Title VII of Law 27/2014, of November 27, on Corporate Income Tax and whether valid economic reasons exist.

The DGT's ruling

The transaction may qualify for the tax neutrality regime under the LIS if the religious entity absorbs company X, assuming its dissolution without liquidation and the transfer of its entire assets. In this case, the income will not be integrated into the transferor, and the values and seniority of the assets will be maintained in the transferee. However, the application of this regime requires that the primary objective of the transaction is not tax fraud or evasion, but rather valid economic reasons.

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