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V2842-20 22 September 2020 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · fusión por absorción

A absorption merger may qualify for special tax regime if valid economic reasons exist

The consultant asks whether an absorption merger between two companies in the same group can apply the special merger tax regime, citing economic grounds. The DGT states that if the transaction meets commercial and fiscal requirements and the reasons are genuinely economic rather than solely for tax benefits, the special regime may apply.

The question raised

The consultant wishes to know whether it is possible to admit the existence of valid economic motives for the proposed merger operation, in the sense that the special regime provided for in Chapter VII of Title VII of Law 27/2014, of November 27, on Corporate Income Tax, can be applied in its entirety.

The DGT's ruling

To apply the special merger regime, the operation must comply with the Law on Structural Modifications and Article 76.1 of the LIS. The motives of saving management and administration costs could be considered economically valid, provided that the predominant purpose is not the exploitation of tax loss carryforwards or tax credits. The existence of tax loss carryforwards does not invalidate the regime if the activities are maintained and the financial situation of the resulting entities is strengthened.

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