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V2803-14 17 October 2014 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · fusión por absorción

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

A listed company has enquired whether its merger by absorption of direct and indirect subsidiaries can benefit from the special tax regime. The Directorate General for Taxes (DGT) has ruled that this is possible provided that commercial and tax requirements are met, and that the transaction is driven by valid economic reasons rather than being solely for tax purposes.

The question raised

Whether the described operation may 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

In order for a merger to qualify for the special regime of the TRLIS, it must comply with the requirements of commercial law and the provisions of Article 83.1. The operation must not have the primary objective of tax fraud or evasion, requiring valid economic motives such as the restructuring or rationalization of activities. The existence of negative tax bases does not prevent the application of the regime, provided that the compensation limits of Article 90.3 and the forty-first transitional provision of the TRLIS are respected.

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