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V3841-15 2 December 2015 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · régimen especial de fusiones

Special merger regime applicable if operation has valid economic reasons

A company has enquired whether a merger of holdings, intended to centralise management and optimise resources, can qualify for the special regime under the Corporate Income Tax Act (LIS). The Directorate General for Taxes (DGT) responds that if the operation is carried out for commercial purposes and has genuine economic objectives, the special regime is applicable, even in the presence of tax loss carryforwards.

The question raised

Question posed: Whether the proposed transaction can benefit from the special regime of Chapter VII of Title VII of the Corporate Income Tax Law, and whether the reasons stated are considered economically valid for these purposes.

The DGT's ruling

To benefit from the special merger regime, the transaction must be carried out in a commercial context and must not have fraud or tax evasion as its primary objective. The reasons of activity rationalization, simplification of structures, and optimization of financial resources are considered economically valid. The existence of negative tax bases or pending deductions does not invalidate the regime if the predominant purpose is not their exploitation. The offsetting of such bases shall be subject to the limits of Articles 84 and DT 16th of the LIS.

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