Offsetting negative tax bases in insolvency liquidation processes

The Directorate General of Taxes (DGT) has issued a relevant ruling regarding the application of limits on offsetting negative tax bases in the context of company dissolution. The inquiry focused on determining whether the exception provided for in the regulations extends to all fiscal years included in the liquidation process.

What the DGT has resolved

The advisory body has determined that the limitation on offsetting negative tax bases should not apply to income generated during an entity's insolvency liquidation period. This criterion holds even if the formal dissolution of the company occurs in a subsequent tax period, considering that such delay is a factor beyond the entity's control.

The resolution emphasizes that the objective of the rule is to prevent the general limit from being applied to income specifically generated by reason of the liquidation and subsequent dissolution of the company. Therefore, the exception contained in Article 26.1 of the Corporate Income Tax Law (LIS) is applicable to the fiscal years in which liquidation operations are carried out.

What this means for you

For companies undergoing an insolvency liquidation process, this criterion provides an advantage in managing their negative tax balances. It means that income obtained during this period can be used to offset negative tax bases without being restricted by the general limit established in Law 27/2014.

This scenario is especially relevant when the liquidation is prolonged over time, ensuring that the offsetting capacity is not diminished by the nature of the process of closing the economic activity.

What should be done

In a situation of insolvency liquidation, it is necessary to analyze the schedule of liquidation operations and the affected tax periods. It must be verified that the income generated is correctly framed within this process to apply the offsetting exception appropriately. Given the complexity of insolvency proceedings and their tax impact, it is necessary to assess each particular situation to ensure compliance with current regulations.