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V0182-17 26 January 2017 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · activos por impuesto diferido

Calculation of provision application based on net increase or decrease per period, regardless of fluctuations

A financial institution has requested guidance on how to calculate the impact of Circular 4/2016 regarding the application of credit risk provisions. The Directorate General for Taxes (DGT) has ruled that the criterion for determining whether provisions have been applied or new ones generated is the net increase or decrease experienced during the tax period.

The question raised

Whether it is possible to consider that the impact derived from the application of Circular 4/2016 can be calculated with reference to the increase in the net tax non-deductible balance of the provision for credit risk and foreclosed assets experienced between January 1 and December 31, taking into account that fluctuations may have occurred during these dates

The DGT's ruling

To determine whether provisions have been applied to their intended purpose or whether higher amounts have been generated, the net increase or decrease in the amount of provisions experienced during the tax period must be used. This calculation must be performed regardless of any fluctuations that may occur throughout said period. In the case of Circular 4/2016, the non-deductible balance existing as of September 30, 2016, shall be understood to have been applied to its purpose up to the amount of the provisions established under the new Annex A, provided that this remains as of December 31.

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