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V5498-26 28 August 2026 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · fusión inversa

Tax neutrality may apply to reverse mergers if valid economic reasons exist

A consulting company proposes a reverse merger where its subsidiary A1 absorbs the parent company A, which holds tax loss carryforwards. The DGT rules that the transaction may qualify for tax neutrality provided it meets the requirements of the Corporate Income Tax Act and its primary objective is not tax fraud or evasion.

The question raised

Question raised - Whether the tax neutrality regime provided for in Chapter VII of Title VII of the LIS is applicable to the reverse merger described (absorption of A by its subsidiary A1).

The DGT's ruling

The merger operation may qualify for the tax neutrality regime under Chapter VII of Title VII of the LIS if it is carried out within a commercial scope and complies with Article 76.1 a). The existence of tax loss carryforwards in the absorbed company does not invalidate the regime, provided that the merger benefits the resulting activities and is not primarily intended to exploit the tax losses. The regime shall not apply if the main objective is tax fraud or evasion (Art. 89.2 LIS).

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