Total mergers and spin-offs may qualify for tax neutrality

Corporate reorganization operations, such as mergers and spin-offs, pose significant tax challenges regarding the integration of income. The Dirección General de Tributos (DGT) has clarified the scope of the tax neutrality regime applicable to these operations, establishing the necessary conditions to avoid the immediate taxation of generated capital gains.

What the DGT has ruled

The binding ruling determines that a merger by absorption may qualify for the tax neutrality regime if it is carried out in a commercial context in accordance with Royal Decree-Law 5/2023 and complies with the provisions of Article 76.1 of the Corporate Income Tax Law (LIS).

Regarding total spin-offs, the DGT points out that they can also benefit from this regime under the protection of Article 76.2.1º a) of the LIS. A relevant aspect is that, in the case of a total spin-off, it is not mandatory for the transferred assets to constitute independent business lines, provided that the receiving shareholder obtains 100% of the shares of the resulting company.

The application of this regime allows the acquiring entity to maintain the values and the seniority of the assets, preventing the transferring entity from having to integrate the income derived from the operation.

What it means for you

For companies involved in merger or spin-off processes, this criterion represents an opportunity to manage the reorganization of their structures without an immediate tax impact from the delivery of goods or the transfer of assets. This allows for the continuity of book values and the seniority of assets in the new entity.

Likewise, for shareholders, the application of neutrality implies that they will not have to integrate income into their Personal Income Tax (IRPF) due to the attribution of values within the framework of the operation.

What should be done

It is fundamental that any operation of this type is based on valid economic reasons. The tax neutrality regime will not be applicable if the administration considers that the main objective of the operation is tax fraud or evasion. Therefore, it is necessary to document the economic reason for the reorganization and verify strict compliance with current regulations before proceeding.