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V0861-22 21 April 2022 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · rendimiento de la actividad económica

Grants for debt cancellation are recorded as business income in the year the debt is settled

A taxpayer inquired about the correct timing for recording a grant received to settle a debt related to their economic activity. The Directorate General for Taxes (DGT) ruled that accounting standards must be followed, meaning the grant must be recorded as income in the same financial year in which the debt is cancelled.

The question raised

Temporal allocation of the subsidy in the Personal Income Tax.

The DGT's ruling

Subsidies for the payment of debts are considered income from economic activity and their temporal allocation is governed by accounting regulations. They must be reflected as income in the fiscal year or years in which said debts are cancelled. However, if the subsidy is granted to finance a specific item, the allocation shall be carried out according to the rules applicable to said item.

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