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V4765-16 10 November 2016 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · consolidación fiscal

Possible deferment of double taxation deductions in first full quota year

A company inquired whether it was obliged to apply its internal and international double taxation deductions in the first year with a positive full quota, or whether it could prioritise other deductions. The DGT responds that there is no obligation to apply them immediately.

The question raised

Confirmation of whether, in accordance with the Corporate Income Tax Law, the deduction of pending deductions to avoid domestic and international double taxation is not mandatory in the first fiscal year following their generation in which the taxpayer obtains a positive gross tax liability, but rather that the taxpayer may apply other deductions within the limits provided for in the Corporate Income Tax Law, without losing the right to apply those in future fiscal years.

The DGT's ruling

Deductions for domestic and international double taxation pending application upon the entry into force of the LIS may be deducted in subsequent tax periods without the obligation to apply them in the first fiscal year with a sufficient tax liability. The taxpayer may opt not to apply them and defer them, allowing for the application of other deductions (activities, donations, or investment in the Canary Islands) after having applied those for double taxation generated in the current fiscal year. Deductions for double taxation generated in the current fiscal year must be applied before those in Chapter IV.

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