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V2049-24 25 September 2024 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · pagos basados en instrumentos de patrimonio

Cash-based incentive plan expenses deductible in the year provision is made

A company asks whether the expense of a multi-year incentive plan, based on share value and payable in cash, is deductible in the accounting period it is recorded. The DGT responds that although the accounting charge must be allocated over the service period, the expense is deductible for tax purposes in the period when the provision is made or when the expense is applied to its purpose.

The question raised

Confirm that the expense corresponding to the Multi-year Incentive Plan, which the consultant will record on the date of the execution of the operation (presumably in the 2022 financial year), in accordance with the provisions of Valuation Standard 17 of the PGC, will be deductible in the consultant's Corporate Income Tax.

The DGT's ruling

Payments based on equity instruments that are settled in cash are not deductible as provisions under Article 14.3.e) of the LIS. However, such expenses shall be tax deductible in the tax period in which the provision is applied or the expense is applied to its purpose. Likewise, if the expense is accounted for in a period later than the period in which it accrued, it shall be counted in the period of the accounting recognition, provided that it does not result in a lower taxation than that which would correspond under the general criterion of temporal imputation.

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