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V5231-16 12 December 2016 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · reserva de capitalización

Capitalisation reserve reduction is incompatible with preferential income under the residential leasing regime

A company engaged in the leasing of residential and commercial premises has requested guidance on calculating the capitalisation reserve reduction due to its incompatibility with preferential income tax relief. The Directorate General for Taxes (DGT) clarifies that the reduction applies only to the portion of the increase in equity that does not correspond to the preferential income.

The question raised

How the reduction for capitalization reserves should be calculated, taking into account its incompatibility with subsidized income. In what way it affects the calculation that a large part of the increase in equity is composed of non-subsidized income. And which tax base must be taken into account for the purpose of applying the 10% limit.

The DGT's ruling

The reduction for capitalization reserves does not apply to the portion of the increase in equity which, when multiplied by the ratio between the subsidized tax liability and the total tax liability, corresponds to the subsidized income. The right to the reduction applies to the difference between the total increase in equity and the proportional part corresponding to the subsidized income. Likewise, the 10% limit of the tax base must be multiplied by the percentage resulting from dividing the non-subsidized tax liability by the total tax liability.

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