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V5157-26 14 July 2026 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · fusión por absorción

Absorption merger of a fully owned subsidiary may qualify for fiscal neutrality

A real estate company proposes absorbing its subsidiary to simplify its structure and optimize resources. The DGT examines whether the transaction meets the conditions for the special merger regime and the treatment of negative taxable bases.

The question raised

1. Whether the proposed merger operation may qualify for the special regime for mergers, demergers, asset contributions, and exchange of securities provided for in Chapter VII of Title VII of Law 24/2014 of November 27 on Corporate Income Tax, and whether the economic motives adduced for the merger in this consultation request are considered valid economic reasons.

The DGT's ruling

If the merger is carried out within the commercial scope pursuant to Royal Decree-Law 5/2023 and complies with Article 76.1.c) of the Corporate Income Tax Act (LIS), it may qualify for the tax neutrality regime. Capital gains shall not be recognized in the transferring company, nor shall tax values be changed in the acquiring company. The tax loss carryforwards of the absorbed company may be offset in the absorbing company subject to the limits of Article 84 of the LIS. The existence of tax loss carryforwards does not invalidate the regime if the merger benefits the activity and does not solely seek their exploitation.

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