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V3347-20 12 November 2020 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · régimen especial de fusiones

Company mergers may qualify for special tax regime if valid economic reasons exist

A query was raised regarding whether a merger between two companies can apply the special Corporate Income Tax regime and if reasons for business concentration are valid. The DGT indicates that if the operation meets commercial and tax requirements, and its primary purpose is not tax evasion, it may qualify for the special regime.

The question raised

1. Whether the projected transaction may qualify for the special tax regime regulated in Chapter VII of Title VII of Law 27/2014, of November 27, on Corporate Income Tax and whether the economic reasons may be considered valid for the purposes of applying the special regime.

The DGT's ruling

The transaction may qualify for the special merger regime if it is carried out within a commercial scope pursuant to Law 3/2009 and complies with Article 76.1 of the LIS. The reasons for restructuring or rationalization may be considered economically valid pursuant to Article 89.2 of the LIS. The existence of tax loss carryforwards does not invalidate the regime if the activities are maintained and it is not the predominant purpose of the transaction. The absorbing company subrogates into the right to offset the tax loss carryforwards of the absorbed company within the legal limits.

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