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V2671-20 24 August 2020 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · deterioro de créditos

Impairment of a credit is not deductible if it should not have been recorded accounting-wise as a bad debt

A company has enquired whether it can claim a tax deduction for the impairment loss of a credit against a former employee who embezzled funds. The DGT has determined that if recovery is improbable, the credit should not be recorded and, therefore, no deduction for impairment is permitted.

The question raised

Criterion regarding the consideration as a deductible expense of the loss due to impairment of the credit against the employee, given the highly improbable recovery of the stolen money, as well as its temporal imputation. Specifically:

The DGT's ruling

If the recovery of the stolen money is improbable, the recording of the credit against the employee is not appropriate. Having erroneously recorded said credit, it is not possible to propose the tax deductibility of the losses due to its impairment. The tax treatment must follow the accounting treatment pursuant to Articles 10 and 11 of the LIS.

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