Did you know that 40% of mergers and acquisitions fail due to undetected tax issues? A poorly planned M&A transaction can drag along millions in hidden liabilities, trigger the Complementary Tax, or clash with European regulations on legitimate economic purpose.
The reality is stark. Ignoring these factors can turn your dream transaction into a financial nightmare. However, with the right tax strategy, M&A can be the perfect catalyst to accelerate your company’s growth.
What to review before signing
Tax due diligence
The preliminary tax review should unravel critical risks such as buried tax debts, tax credits without solid documentation, and incentives applied without a real economic basis.
In 2024, for example, a Spanish technology company had to return €2.3 million in R&D deductions incorrectly applied by the acquired company. The fine and interest doubled the initial impact.
In 2025, the Supplementary Tax has added complexity. Your obligations are assessed based on the post-merger situation of the consolidated group. Two individually exempt companies may, after the transaction, be subject to this 15% tax on profits exceeding £20 million.
The European filter that can stop your transaction
The EU Anti-Tax Abuse Directive requires that all acquisitions have genuine economic motivation. A transaction motivated solely by tax benefits may be declared elusive. In Spain, the Treasury is applying this criterion with increasing rigour.
Remember to document the commercial reasons for your transaction from day one. A solid business case will shield the transaction from tax scrutiny.
Acquisition structure
The choice between purchasing assets, acquiring shares or merging determines the treatment of capital gains, the inheritance of tax credits and the degree of exposure to tax liabilities. An intelligent structure minimises the immediate tax burden without mortgaging the future.
After signing
The SPA
The purchase agreement must include dynamic adjustment clauses for tax contingencies and compensation systems. W&I insurance is now standard in transactions exceeding €10 million in Spain.
According to KPMG (2025), more than 30% of SPAs include specific clauses on the Complementary Tax. The average cost of a W&I policy represents between 0.8% and 1.2% of the transaction value, but can save you up to 10 times that amount.
Tax integration
Once the transaction is closed, integration determines the final success. A poorly executed process can lead to tax duplication, trigger tax inspections and create loopholes that compromise the company’s image with investors.
Successful integration requires unified filing of corporate income tax and consolidated VAT, consistent accounting criteria and centralised management of tax obligations.
In complex transactions, we recommend setting up a «tax war room» during the first 90 days after closing to detect and resolve discrepancies in real time.
In the world of M&A, tax is part of the strategic DNA of any successful transaction. Companies that understand this from day one turn tax planning into a competitive advantage.
Our integrated approach designs tax-efficient structures, anticipates regulatory changes and executes transitions that protect the value of your investment.
Are you planning an M&A transaction? The best decision starts with a conversation. Contact us and you will find in Confianz your strategic partners with more than 30 years of experience.