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V1856-23 27 June 2023 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · derivación de responsabilidad

The payment of third-party debts due to derivative liability constitutes a credit right and not a deductible expense

A company paid the debts of another entity for which it was held liable. The DGT responds that this payment is not an expense, but a credit that the company holds against the debtor, and that its forgiveness does not generate tax effects if it is accounted for as a contribution by partners.

The question raised

Question raised: Tax treatment of the debt in the event of non-repayment or partial repayment of the amounts paid, as well as the accrued interest. Specifically, whether such amounts could be considered deductible extraordinary expenses.

The DGT's ruling

The payment of a third-party debt due to the entity's liability generates a credit right against the principal debtor, not an expense. Accounting-wise, this credit must be recorded in assets and may be subject to impairment. If the credit is forgiven between companies with the same partners, it must be recorded as a contribution by partners in equity, which does not generate tax effects on the Corporate Income Tax taxable base as it does not affect the accounting result.

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