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V3786-15 30 November 2015 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · entidades vinculadas

Impairment loss on a loan to a related party is deductible if the liquidation phase of insolvency proceedings has commenced

A company sought clarification on when it could deduct as an expense the final loss from a loan granted to a related party that entered insolvency proceedings. The DGT ruled that, because the entities are related, deductibility requires the debtor to be in insolvency proceedings and for the liquidation phase to have officially commenced.

The question raised

In which fiscal year must the total recovery of the aforementioned debt be considered definitively impossible and, consequently, the ''judicially declared insolvency'' of the balance owed by the related entity B occurs, proceeding to record the definitive loss of said loan and likewise considering said loss as a deductible expense for the taxable base.

The DGT's ruling

For the impairment loss of a credit against a related entity to be deductible, the debtor must be in insolvency proceedings and the liquidation phase must have been opened by the judge. If the entity records the write-off of the asset as an expense in the fiscal year in which this requirement is met, no adjustments to the accounting result shall be made to determine the taxable base.

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