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V3004-17 20 November 2017 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · cobertura contable

Changes in SWAP value as hedge accounting do not affect taxable base if recorded in equity

A company has requested a ruling on the tax treatment of fair value changes in SWAPs under hedge accounting and their impact on the deductibility limit for financial expenses. The DGT clarifies that variations in equity do not have immediate tax effects and determines when they must be included for the purposes of Article 16 of the Corporate Income Tax Act.

The question raised

1. Tax treatment of fair value changes of the SWAPS contracted by the applicants while they maintain the status of accounting hedges, when they lose said status, and when they regain it. And whether the income and expenses recorded in the Profit and Loss account as a consequence of the fair value variations of the SWAPS must be taken into consideration for the purposes of Article 16 of the LIS.

The DGT's ruling

If the SWAP constitutes accounting hedge, its fair value variations in equity do not affect the tax base until its settlement or the loss of hedge status. Income and expenses from settlement are accounted for in the period of said settlement. For the purposes of the limit set forth in Article 16 of the LIS, the effects of hedges linked to indebtedness must be accounted for, but income or expenses derived from the loss of hedge status once decoupled from the hedged item shall not be accounted for. The transfer to profit and loss of accumulated balances in equity due to the commencement of the settlement phase does indeed count towards the financial expense limit.

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