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V3132-14 19 November 2014 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · fusión impropia

Mergers may qualify for special tax regime if they meet commercial requirements and have valid economic reasons

The taxpayer asks whether an improper merger and a reverse merger can benefit from the special tax regime for mergers. The DGT rules that this is possible provided they comply with commercial regulations and their primary purpose is not tax advantage.

The question raised

1) Whether the improper merger operation of entity A described by the consulting entity may qualify for the special tax regime of Chapter VIII, Title VII of the Recast Text of the Corporate Income Tax Law approved by Royal Legislative Decree 4/2004, of March 5.

The DGT's ruling

For a merger to qualify for the special regime under the TRLIS, it must comply with the requirements of commercial law regarding structural modifications. The operation must not have the primary objective of tax fraud or evasion, but rather respond to valid economic reasons such as the restructuring or rationalization of activities. In a merger by absorption, the acquiring company subrogates into the tax rights and obligations of the transferring company, including outstanding deductions.

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