Mergers by absorption may qualify for tax neutrality without fraudulent purposes

Business restructuring operations through mergers by absorption benefit from a specific tax treatment framework that seeks to avoid the immediate tax burden on capital gains. However, the application of this regime is conditioned on the nature and objectives of the operation.

What the DGT has ruled

The Directorate General of Taxes (DGT) has determined that mergers carried out in a commercial context, in accordance with Royal Decree-Law 5/2023 and complying with the requirements of Article 76.1 of the Corporate Income Tax Law (LIS), may qualify for the tax neutrality regime. The criterion establishes that this benefit will not be applicable if the main objective of the operation is fraud, tax evasion, or the obtaining of a spurious tax advantage.

The authority clarifies that, while the absence of valid economic motives may create a presumption of fraud, the existence of other legitimate business objectives allows for the application of the regime. In the case analyzed, the centralization of activities and the rationalization of management are considered valid economic motives that justify tax neutrality.

What it means for you

For companies, this criterion confirms the possibility of carrying out reorganization processes without having to include capital gains in the Corporate Income Tax (IS) taxable base at the time of the merger. This allows for a more efficient restructuring of business groups.

Likewise, for partners who are natural persons resident in Spain, this regime implies that they will not have to include income from the attribution of values at the time of the merger, maintaining the tax continuity of the operation.

What should be done

In the event of a merger or restructuring operation, it is necessary to prove the existence of valid economic motives that justify the operation beyond tax savings. Documentation must reflect management, centralization, or operational efficiency objectives to prevent the Administration from presuming an intention of fraud or evasion.