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V3198-23 12 December 2023 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · fusión impropia

Merger of a wholly-owned subsidiary allows for tax neutrality and carryover of tax loss carryforwards under certain conditions

A company owning 100% of another seeks guidance on the tax implications of absorbing its subsidiary. The DGT indicates that, provided merger requirements are met and there is no fraud, the tax neutrality regime and the carryover of tax loss carryforwards shall apply.

The question raised

The taxpayer requests confirmation of the following points:

The DGT's ruling

If the transaction complies with Article 76.1.c) of the LIS and the commercial scope of Royal Decree-Law 5/2023, the tax neutrality regime shall apply. In this case, income from the cancellation of the participation shall not be recognized, and the values and seniority of the assets shall be maintained. The negative tax bases of the absorbed company may be offset in the absorbing company under the requirements of Article 84 of the LIS. However, if the primary objective is tax advantage, this special regime shall not apply.

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