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V4873-16 11 November 2016 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · imputación temporal

Deductibility of loss on shareholding governed by accounting recognition period

A company inquired about the tax treatment of a impairment and subsequent write-down of an Austrian subsidiary following bankruptcy. The DGT states that in the case of an accounting classification error, the expense is deductible in the period when the asset write-down is recognised in the accounts.

The question raised

What is the tax treatment to be applied to the impairment and reclassification, taking into account that the consulting entity became aware of this situation in the 2015 financial year.

The DGT's ruling

If an accounting error occurs in the classification of an expense (recording an impairment instead of a derecognition), the temporal allocation shall be carried out in the period in which its accounting recognition takes place. In this case, the expense for the derecognition of the holding must be tax deductible in the period in which the accounting recognition of said derecognition of the asset occurs.

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