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V2878-18 5 November 2018 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · entidad parcialmente exenta

Non-profit associations may apply the special merger regime if they meet LIS requirements

A sports association without public utility status has enquired whether it can apply the special tax merger regime when absorbing two other associations. The DGT has ruled that this is possible provided that the conditions of the Corporate Income Tax Act (LIS) are met and the transaction is driven by valid economic reasons.

The question raised

Whether the proposed merger operation could be subject to the special tax regime provided for in Chapter VII of Title VII of Law 27/2014, of November 27, on Corporate Income Tax.

The DGT's ruling

Non-profit entities that are not subject to Law 49/2002 are partially exempt entities and may apply the special merger regime. To this end, the operation must involve the bulk transfer of social assets through the dissolution without liquidation of the absorbed entities, without altering the participation of the members. Furthermore, the operation must not have the primary objective of tax fraud or evasion, and must respond to valid economic motives.

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