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V4163-15 30 December 2015 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · consolidación fiscal

Intragroup income and expense eliminations must be made prior to the offsetting of tax loss carryforwards

A query was raised regarding whether the elimination of items arising from transactions between group companies must be carried out before offsetting individual tax loss carryforwards. The DGT ruled that, pursuant to Article 62 of the Corporate Income Tax Act (LIS), such eliminations must be performed prior to said offsetting.

The question raised

Whether the elimination of income and expense items from intra-group transactions is carried out prior to the offsetting of individual tax loss carryforwards existing before the consolidation of each company.

The DGT's ruling

In accordance with Article 62 of the LIS, the elimination of income and expense items from intra-group transactions is carried out prior to the offsetting of individual tax loss carryforwards existing before the consolidation of each company. However, the LIS does not establish a priority regarding the offsetting of tax loss carryforwards, meaning that both those existing prior to consolidation and those generated within the tax group may be applied, provided that the limits and conditions of the special regime are met.

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