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V2859-23 24 October 2023 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · fusión por absorción

Merger by absorption may qualify for the tax neutrality regime if legal requirements are met and valid economic reasons exist

A consulting company proposes a merger by absorption of three entities wholly owned by it. The DGT explains that the operation may apply the special tax neutrality regime if carried out for commercial purposes and meets the requirements of the Corporate Income Tax Act, provided that its primary objective is not tax fraud or tax advantage.

The question raised

Question posed: Whether the special regime for mergers, spin-offs, asset contributions, and exchange of securities provided for in Chapter VII of Title VII of the LIS would be applicable to the proposed merger operation and whether, for these purposes, the economic reasons indicated in this consultation can be considered valid in accordance with the provisions of Article 89.2 LIS and the cited administrative doctrine.

The DGT's ruling

If the merger is carried out under Royal Decree-Law 5/2023 and complies with Article 76.1 of the LIS, the tax neutrality regime may apply. In this case, the transferring companies shall not recognize income and the acquiring company shall maintain the values and seniority of the assets. However, the regime shall not apply if the primary objective of the operation is tax fraud or tax evasion, or if it lacks valid economic reasons. The verification of these reasons is a question of fact that must be carried out by the Administration according to the circumstances of each case.

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