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V0353-16 28 January 2016 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · beneficio operativo

Operating profit for the financial expense limit is not adjusted for exempt income or non-deductible expenses

A consulting entity asks whether, to calculate the operating profit (limit for the deductibility of financial expenses), the result must be adjusted by removing exempt income or non-computable expenses. The DGT responds that the operating profit only allows for the specific corrections provided for in Article 16 of the LIS.

The question raised

Question raised 1. Whether, to calculate the net deductible financial expense, the operating profit must be adjusted for the portion corresponding to exempt income or non-computable expenses for the purposes of the Corporate Income Tax Law, such as exempt income arising from the performance of activities through permanent establishments abroad, exempt dividends, or non-deductible expenses.

The DGT's ruling

Operating profit is determined from the operating result of the profit and loss account according to the Commercial Code. Only the corrections established in Article 16 of the LIS must be made: removing depreciation of fixed assets, grants for non-financial fixed assets and others, impairment and results from the disposal of fixed assets, and adding financial income from holdings in equity instruments under the participation or acquisition value requirements. No other adjustments should be made for exempt income from permanent establishments abroad, exempt dividends other than those indicated, or non-deductible expenses.

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