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V0745-22 5 April 2022 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · reserva de capitalización

Failure to maintain equity requires regularisation of the capitalisation reserve

A company has enquired whether a regularisation following an inspection procedure that reduces its reserves constitutes a breach of the capitalisation reserve requirements. The DGT has ruled that such a charge reduces equity and, if the required increase is not maintained, the full amount of the previously applied profits must be paid back, plus interest.

The question raised

Whether an inspection procedure resulting in a failure to maintain the increase in equity would be covered under Article 25 of Law 27/2014, of November 27, on Corporate Income Tax, given that the reduction does not stem from a distribution. Whether previous tax periods must be regularized or if a capitalization reserve may not be applied while maintaining those from previous financial years.

The DGT's ruling

The maintenance of the increase in equity requires that, in each of the 5 years, the difference in equity (excluding results) be equal to or greater than the increase that originated the reduction. If an accounting adjustment decreases the voluntary reserve and causes this requirement not to be met, the unduly reduced amount must be regularized. This implies paying, in the period of non-compliance, the full tax liability corresponding to the tax benefit applied in previous financial years, together with late payment interest.

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