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V1940-19 23 July 2019 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · quita

Remission of penalties is not included in the tax base if the original expense was non-deductible

A query was raised regarding whether income from a 50% remission of penalties, previously recorded as an expense, must be included in the tax base. The DGT ruled that since the penalties were non-deductible, their reversal is not subject to tax.

The question raised

1. Whether the income derived from the 50% remission affecting penalties, which were recorded as expenses, is included in the taxable base.

The DGT's ruling

The income derived from the remission of penalties shall not be included in the taxable base for Corporate Income Tax because the reversal of expenses that have not been tax-deductible must not be included. Administrative fines and penalties are not tax-deductible pursuant to Article 15.c) of the LIS. Therefore, the remission of debt owed to the Tax Administration for such penalties does not constitute taxable income.

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