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V2890-15 6 October 2015 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · régimen especial de fusiones

The special merger regime does not apply if the tax advantage from negative tax bases is preponderant

A consulting company proposes a merger by absorption of a subsidiary to reduce costs and improve its structure. The DGT responds that, if the primary purpose is to take advantage of the negative tax bases of the absorbing company (which has no activity), the operation lacks valid economic reasons.

The question raised

Question posed: Whether the proposed operation could qualify for the special tax regime regulated in Chapter VII of Title VII of the Corporate Income Tax Law. And whether the economic reasons can be considered valid for the purposes of applying the aforementioned special regime.

The DGT's ruling

To qualify for the special merger regime, the operation must be carried out for valid economic reasons and not merely for the purpose of obtaining a tax advantage. If the tax advantage (offsetting of negative tax bases) is preponderant relative to cost savings or structural simplification, the regime shall not apply. In the event of an audit, the non-application of the regime shall be limited to eliminating the tax advantage obtained, namely, the utilization of said tax bases.

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