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V3459-16 20 July 2016 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · fondos propios

Increase in equity must first offset non-deductible impairments generated after 1 January 2013

A query was raised regarding whether an increase in a subsidiary's equity should be included in the tax base to reverse old impairments, even if it does not offset losses from recent financial years. The DGT ruled that the increase must first be applied to impairments generated in recent years that have not been tax-deductible.

The question raised

Whether the taxpayer is obliged to include in its 2015 tax base the increase in equity of its Portuguese subsidiary, despite the fact that said increase does not offset the decrease in equity generated in the 2013 and 2014 financial years.

The DGT's ruling

The increase in equity must be applied, in the first instance, to the most recent financial years in which a decrease in equity occurred and which were affected by the non-deductibility of impairment losses. Once said recovery of non-deductible impairments has occurred, the provisions of the sixteenth transitional provision of the LIS shall apply for the reversal of impairments that were deductible prior to 2013.

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