A Spanish company with a 95% Mexican subsidiary proposes the dissolution of an inactive subsidiary. The granted loans are fully impaired accountably. The DGT distinguishes between the impairment phase (not deductible due to related parties without liquidation opening) and the extinction phase, when prior adjustments are reversed and the final loss is recognised, making the negative income deductible under art. 21.8 LIS.
Question posed: In the event that the described capital increase is not carried out and the immediate dissolution of the investee entity is chosen, making it impossible to repay the loans granted, would the loss arising from said loans be deductible for the consulting entity in application of the provisions of Chapter I of Title IV of Law 27/2014, of November 27, on Corporate Income Tax.
Impairment losses on receivables from related parties are not tax-deductible unless the debtor is in insolvency proceedings with the opening of the liquidation phase by the judge (Art. 13.1.2º LIS). During the period of the subsidiary's dissolution, previous positive extra-accounting adjustments are reversed and the definitive loss is recognized in accordance with Article 20.b) LIS. The negative income arising from the dissolution, resulting from the difference between the market value of the assets received and the tax value of the cancelled shareholding (Art. 17.8 LIS), is deductible pursuant to Article 21.8 LIS if the dissolution does not constitute a restructuring operation, reduced by the exempt dividends received in the previous ten years. The effects of STC 11/2024 on the sixteenth transitional provision of the LIS must be taken into account.
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