Companies in mergers may maintain tax neutrality and tax consolidation

Structural reorganizations of companies involving merger processes and the management of tax groups under the consolidation regime have received relevant technical clarification from the Tax Administration.

What the DGT has ruled

The Dirección General de Tributos (DGT) has determined that if a merger complies with commercial requirements and those established in Article 76.1 of the Corporate Income Tax Law (LIS), the operation may opt for the tax neutrality regime. In this sense, the Administration clarifies that the existence of valid economic motives does not constitute an indispensable requirement for the application of this regime, although it warns that their absence could lead to a presumption of fraud.

Regarding tax consolidation, the criteria establish that the absorbing company subrogates into the position of the parent company. This allows for the formation of a new tax group provided that legal conditions are met. If all the entities that made up the previous group are incorporated into the new scheme, the neutrality rules provided for in Article 74.3 of the LIS will apply.

What it means for you

For companies operating through group structures, this criterion provides legal certainty in reorganization processes. It means that a merger does not necessarily interrupt the continuity of the tax consolidation regime, provided that the absorbing company assumes the position of the parent company and all entities from the previous group are integrated.

The relevance of this ruling lies in the confirmation that tax neutrality is applicable without economic motivation being a mandatory element, shifting the burden of proof to the Administration in case of suspected fraud.

What should be done

In the event of a structural reorganization, it is necessary to verify that the operation strictly complies with the requirements of Article 76.1 of the LIS and with current commercial regulations. It is fundamental to document the merger structure to ensure subrogation into tax consolidation and to guarantee that the integration of the entities complies with the provisions of Article 74.3 of the LIS. It is recommended to assess each operation individually to ensure compliance with the necessary technical requirements.