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V2395-14 11 September 2014 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · ejecución provisional

Compensation received via provisional enforcement of a judgment has no tax implications until the judgment becomes final

A company has enquired whether a provision for compensation received through the provisional enforcement of a judgment is tax-deductible. The DGT has ruled that such income only accrues once the judgment becomes final.

The question raised

1. In the event that the consultant requests the provisional enforcement of the sentence and receives the amount of the compensation, would they record a provision for the same amount? Would such a provision be tax-deductible?

The DGT's ruling

Compensation awarded by judicial sentence accrues when the sentence becomes final, at which point there is legal certainty regarding the right to income. If collected through provisional enforcement, the amount must not affect the profit and loss account or the taxable base, and must be recorded as a liability. If the final sentence is unfavorable, the refund of the amount shall have no impact on the taxable base.

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