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V2805-14 17 October 2014 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · deterioro de participaciones

Impairment provisions for group company holdings may follow Art. 19.13 TRLIS rules if they reflect impairment of assets acquired in satisfaction of debt

A credit institution has enquired whether impairment provisions for holdings in group companies, which reflect the depreciation of real estate assets acquired in satisfaction of debt, are subject to the temporal imputation rule of Article 19.13 of the TRLIS. The DGT rules that, if these provisions reflect the impairment of assets acquired in satisfaction of debt, the tax treatment applicable to those assets applies, rather than that applicable to the holdings.

The question raised

Whether the rule of temporal imputation established in Article 19.13 of the consolidated text of the Corporate Income Tax Law is applicable to provisions for impairment of holdings in group companies that were non-deductible in previous years, insofar as such provisions correspond to a provision for insolvency and reflect the depreciation of real estate assets.

The DGT's ruling

The tax treatment of impairments in participated entities must be equivalent to that which would apply to assets acquired in settlement of debts if they were held directly. Therefore, if the provision reflects the depreciation of real estate assets allocated or purchased preventively, Article 19.13 of the TRLIS applies. This allows the associated deferred tax assets to become receivables against the Administration pursuant to the twenty-second additional provision of the TRLIS.

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