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V2693-14 9 October 2014 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · reparaciones extraordinarias

Failure to implement extraordinary repairs plan requires repayment of tax deductions

A query was raised regarding the tax implications of failing to comply with a plan for provisioning extraordinary repairs. The DGT ruled that the situation must be regularised by repaying the previously deducted amounts plus interest.

The question raised

Tax treatment of the potential non-compliance with the Extraordinary Provision Allocation Plan for the coverage of the extraordinary repair of its specialized complex installation, and specifically, whether an adjustment should be made to the tax base or to the Corporate Income Tax liability.

The DGT's ruling

The deductibility of provisions for extraordinary repairs is conditional upon compliance with the terms approved in the plan accepted by the Administration. In the event of non-compliance with the requirements of the plan, the taxpayer must pay, together with the tax liability for the period in which the non-compliance occurs, the amount deducted in previous periods, in addition to late payment interest.

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