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V4125-15 22 December 2015 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · régimen especial de fusiones

Group company mergers may qualify for special regime if valid economic reasons exist

A company enquired whether a merger of its subsidiaries could qualify for the special merger regime and if this would dissolve the tax group. The DGT ruled that this is possible provided the transaction serves economic purposes rather than being solely for tax advantages, and that the dissolution of the tax group occurs upon registration of the merger in the Mercantile Registry.

The question raised

Question raised 1) Whether the described transaction may qualify for the special tax regime under Chapter VII of Title VII of Corporate Income Tax Law 27/2014, of November 27.

The DGT's ruling

To apply the special merger regime, the transaction must meet commercial requirements and have valid economic motives, such as the restructuring or rationalization of activities. The existence of tax loss carryforwards does not prevent the regime if it is not the primary objective. The dissolution of the tax group occurs on the date the merger is registered in the Mercantile Registry. In mergers between group companies, the tax imputation of income follows the accounting retroactivity to the beginning of the fiscal year.

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