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V3843-15 2 December 2015 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · régimen especial de fusiones

Special merger regime applicable if valid economic reasons exist rather than tax-driven purposes

A company has enquired whether the merger of several holding companies to centralise management and optimise resources can qualify for the special merger regime. The DGT has ruled that if the transaction is driven by valid economic reasons and is not primarily intended for tax fraud or evasion, the said regime may be applied.

The question raised

Question posed: Whether the proposed transaction may qualify for the special regime under Chapter VII of Title VII of the Corporate Income Tax Act, and whether the reasons set forth are considered economically valid for these purposes.

The DGT's ruling

To qualify for the special merger regime, the transaction must be carried out in a commercial context and comply with the requirements of the Corporate Income Tax Act. The regime shall not apply if the primary objective is tax fraud or evasion, or if there are no valid economic reasons such as the restructuring or rationalization of activities. The existence of tax loss carryforwards in the absorbed companies does not invalidate the regime if the predominant purpose of the merger is not their exploitation.

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