Back to index
V5209-26 20 July 2026 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · fusión por absorción

A fully owned subsidiary merger may qualify for tax neutrality

A client raises a merger by absorption of a subsidiary in which it holds 100% of shares. It is sought whether the transaction may apply the tax neutrality regime and whether valid economic grounds exist.

The question raised

Whether the transfer of the business assets from entity B to entity A, as a consequence of the merger, constitutes an autonomous economic unit for the purposes of applying non-liability to Value Added Tax pursuant to Article 7 of the VAT Law, thereby becoming subject to Transfer Tax. In short, the indirect taxation of the merger operation is being addressed.

The DGT's ruling

The transfer of assets in a merger does not constitute an autonomous economic unit as it lacks an organizational structure of production factors, being a mere transfer of goods subject to VAT. For Corporate Income Tax purposes, the transaction may qualify for the tax neutrality regime if valid economic reasons exist and there is no fraud. Regarding ITPAJD, the restructuring operation is exempt from the modalities of onerous asset transfers and documented legal acts.

Free assessment and quote