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V3609-20 17 December 2020 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · fusión

A merger may qualify for the special regime if it meets commercial requirements and has valid economic reasons

The taxpayer asks whether a merger operation may apply the special regime of the Corporate Income Tax. The DGT indicates that it must comply with commercial regulations and Article 76.1 of the LIS, in addition to having valid economic reasons and not having fraud or tax advantage as its primary purpose.

The question raised

Question raised 1) Whether the described operation may qualify for the tax regime provided for in Chapter VII of Title VII of Law 27/2014, of November 27, on Corporate Income Tax.

The DGT's ruling

To apply the special merger regime, the operation must be carried out under the Law on Structural Modifications and comply with Article 76.1 of the LIS. It is essential that the operation responds to valid economic reasons and does not have tax advantage or fraud as its main objective, pursuant to Article 89.2 of the LIS. The existence of tax loss carryforwards in the absorbed entity does not prevent the regime, provided that the activities are maintained and it is not the preponderant purpose of the operation. In the event of application, the compensation of tax loss carryforwards shall be subject to the limits of Articles 84 and DT 16 of the LIS.

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