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V3284-20 5 November 2020 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · plan de incentivos

Cash incentive plan payments are not deductible in the accounting period of their registration

A company has requested clarification on whether payments from executive incentive plans are deductible for Corporate Tax purposes. The DGT has ruled that these expenses are not deductible in the period they are recorded in the accounts, but rather when the employee becomes entitled to receive them and the remuneration becomes due.

The question raised

Whether the payments to be made by the taxpayer in the 2017 financial year are considered tax-deductible expenses for Corporate Income Tax purposes.

The DGT's ruling

Personnel expenses arising from payments based on equity instruments settled in cash are not deductible in the period of their accounting recognition pursuant to Article 14.3.e) of the LIS. These expenses shall be included in the tax base in the period in which the provision is applied or the expense is allocated to its purpose, i.e., when the remuneration becomes due to the employee.

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