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V3131-14 19 November 2014 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · régimen especial de fusiones

Mergers of real estate companies may qualify for special Corporate Tax regime if valid economic reasons exist

A family group has enquired whether the merger of its real estate companies can benefit from the special Corporate Tax regime and how it is treated for VAT and Transfer Tax (ITPAJD). The DGT has determined that reasons based on centralisation and efficiency constitute valid economic grounds for Corporate Tax purposes, although VAT treatment will depend on whether an autonomous economic unit is being transferred.

The question raised

Question raised: Application of the special regime of Chapter VIII of Title VII of the recast text of the Corporate Income Tax Law to the proposed transaction. And whether the alleged reasons are considered economically valid for these purposes.

The DGT's ruling

For Corporate Income Tax, the transaction may qualify for the special regime if it is carried out within a commercial scope and has valid economic reasons, such as the rationalization of activities or the improvement of financial capacity. Regarding VAT, the transfer of an autonomous economic unit is not subject to tax, whereas the transfer of assets that do not constitute such a unit shall be subject to tax and, where applicable, exempt. Regarding Personal Income Tax and Non-Resident Income Tax, the merger is considered a restructuring operation, which renders it not subject to tax or exempt, depending on the case.

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