Company tax in Spain. Losses from previous fiscal years

The time limit to compensate the negative tax bases of the company tax in Spain generated by the losses from previous tax years has changed drastically by the law 27/2014.

New measures are being taken in the law 27/2014: compensation of negative tax bases:

How compensation of negative tax bases is being dealt with, is set forth in article 26 of the law 27/2014 and this now changes substantially. These tax bases will be applied without any time limit in the future.  In other words, negative tax bases generated since 1997 may be compensated from now onwards. Congratulations!

There is however a quantity limit of 70% of the tax base prior to compensation. But then again, a compensation of 100% is allowed in case the minimum amount is 1 million euros.

Keep your issued and received invoices in Spain:

It is important to be able to provide the tax office with certain documents of the accountancy, such as:

• Issued invoiced
• Received invoices
• Bank extracts and receipts of payment

because the administration authorities have a period of ten years to verify whether the compensation of negative tax bases is applicable or not.

In order to avoid the purchase of non-active companies or quasi non-active companies with negative tax bases, a series of limitations is being registered that must be taken into account.

The negative tax bases cannot be taken into account at the time of the purchase if one of the following situations occur:

1º No economic activity has been registered during the 3 months prior to the purchase.

2º The company will carry out a different or an additional economic activity in the 2 years after the purchase than the previous activity.

3º The company is a equity entity. The so known “Entidad Patrimonial”.

4º The entity was unregistered from the entities’ registry due to not having filed the return during three consecutive tax periods.

Do not hesitate to contact your team of expert accountants and fiscal advisors for all your fiscal, legal and accountancy questions.

María Teresa Arcos, lawyer in Marbella

Wim Lamers, economist in Marbella