Tax considerations are a crucial aspect of M&A practice. It is essential to have specialized tax experts involved since the very beginning of the due diligence process and throughout the acquisition or merger process, as these transactions can have an impact on various taxes in Spain. This applies not only to M&A transactions, but also to the process of dissolving a partnership or when a company issues new shares with a share premium or restructuring operations.
These transactions may affect taxes such as Corporate Income Tax, Value-Added Tax (VAT), Personal Income Tax, and Transfer Tax. It is also important to note that the valuations and capital gains generated by these transactions will be a key factor in calculating the tax effects. Therefore, it is essential to have a thorough understanding of the tax implications of these transactions and to seek professional advice.
In order to facilitate corporate reorganizations (mergers, spin-offs, contributions of assets, and exchanges of securities and transfers of registered office of a European company or a European cooperative society from one EU Member State to another), Spanish law provides for a well-established special regime based on the principles of non-intervention by the tax authorities and tax neutrality, which guarantees the deferral of or exemption from taxation, as appropriate, in respect of both direct and indirect taxation, for taxpayers carrying out such operations, along the same lines as the rest of the EU Member States.
Another advantage of the special regime is that absorbing an entity can be subrogated to the right to offset tax loss carry forwards of the absorbed entity or branch of activity.
The correct application of special tax regimes can be very complex. At CIB, we have assisted many companies in taking advantage of these opportunities by providing expert guidance and support. Our Tax Specialists team has the knowledge and experience to navigate the complexities of special tax regimes and to help companies the identify the best course of action.
