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What it is

Tax breaks for company mergers and changes to several taxes

BOE step 7 of 7 · Passed

It is a government bill. Introduced by the Government. It was introduced on 14 October 1991. Introduced by: Gobierno.

Official title: Government bill on the adaptation of certain tax concepts to the Directives and Regulations of the European Communities.

Follow this law

Source: Congreso de los Diputados, file 121/000068· updated 11 Nov

Automatic summary, not yet reviewed

  1. Mergers, spin-offs, contributions of business branches and share exchanges are not taxed right away: gains or losses of the transferring company are not included in the corporate tax base. It is possible to give up this regime.
  2. Shareholders of the companies taking part in these operations also do not pay tax on the shares they receive, and those shares are valued for tax purposes at the value of the ones they handed over.
  3. The acquiring company values the assets for tax purposes as if the operation had not happened, and takes over the pending tax rights and obligations of the transferring company, but not the right to offset losses.
  4. Dividends a subsidiary pays to its parent company are not subject to withholding, if the parent owns at least 25% of the capital and has done so for two years. The parent deducts from its tax bill the tax already paid by the subsidiary, up to a limit.
  5. The parent-subsidiary regime does not apply if the parent is controlled by people from outside the European Union or if either company is based in a tax haven.
  6. To enjoy the tax regime for mergers, the operation must be reported in advance to the Ministry of Economy and Finance. If the operation was done to defraud, the benefit is lost and the tax situation is corrected with penalties and interest.

Who it affects

  • Spanish companies that merge, split or exchange shares: They are not taxed right away on these operations and must report them in advance to the Ministry of Economy and Finance.
  • Shareholders of those companies: They do not pay tax on the shares received in the exchange.
  • Parent companies with subsidiaries in other European Union countries: Dividends they receive are not subject to withholding and they can deduct part of the tax paid by the subsidiary.
  • Companies controlled from tax havens: They are excluded from these tax benefits.

Words worth knowing

Base imponible
The amount of money on which a tax is calculated (tax base).
Retención
Money withheld in advance from a payment and paid to the tax authority on behalf of the person receiving it (withholding).
Canje de valores
Exchange of shares in one company for shares in another.
Paraíso fiscal
A country or territory with very low or no taxes that attracts foreign money (tax haven).
Escisión
An operation in which a company splits its assets and distributes them among other companies (spin-off).

It summarizes the law as published in the BOE. It is written by artificial intelligence and may contain mistakes: the official text is what counts. Read the official text · How we make summaries

Where it stands

How far did it get?

It took 7 of 7 steps. It reached BOE, and today it is passed.

  1. Introduced14 October 1991Someone registers the text in the Congreso.
  2. Admitted15 October 1991The Bureau of the Congreso accepts it and, for a members’ bill, the plenary decides whether to consider it.
  3. Amendmentsno dateGroups propose changes.
  4. Committeeno dateA committee goes through the text in detail.
  5. Plenaryno dateAll 350 deputies vote.
  6. Senateno dateThe Senate can pass it, amend it or veto it.
  7. BOEno dateIt is published in the Official State Gazette (BOE) and comes into force.
See the 2 official steps on a timeline
Oct 199111. 14 October 1991: Presentación22. 15 October 1991: Calificación

Was there a plenary vote?

We have no plenary vote linked to this law in the Congreso’s data.

What happens next

What happens now?

It is law, or will be once published in the BOE. It comes into force on the date its own text sets.

Published in the BOE: Law 29/1991, of 16 December, on the adaptation of certain tax concepts to the Directives and Regulations of the European Communities.

Sources

Where does all this come from?

  • The data comes from the open files of the Congreso, the Senate and the BOE, unaltered.
  • Each deputy’s province is the one of their seat on the day of the vote.
  • We only say “passed” or “rejected” when the majority needed is certain; otherwise we say which side had more votes.

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