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V2892-19 ·21 October 2019 ·consulta-vinculante Medium impact
Tax

Maintenance expense provisions are not deductible unless they constitute a repair warranty

An office equipment company inquired whether it could apply a deductible tax provision to cover future maintenance costs. The DGT ruled that this scenario does not qualify as a warranty provision under the Corporate Income Tax Act (LIS) and will only be deductible if it is an accounting expense that meets the requirements of accrual and correlation.

In 6 key points

How it affects those involved

Companies cannot arbitrarily set aside provisions for future maintenance to reduce taxable income; such provisions must strictly meet the legal criteria for warranty guarantees or satisfy the principles of accrual and the correlation of income and expenses.

Lifecycle

2019-10-21PublishedPublished in the BOE
Official text Based on BOE data (boe.es). Information, not advice.

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This analysis is informational only and does not constitute legal advice or create a client-adviser relationship. BM Consulting.
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