STORIES

9 March, 2017

Accounting management of the new tax regulations for portfolio impairments

ICAC main guidelines: The tax treatment of portfolio impairment, how the mandatory reversal has to be treated, from an accounting view – point and how portfolio impairment losses are treated, for accounting purposes

The Spanish Accounting and Auditing Institute (ICAC) has made public a consultation on the accounting treatment of the tax changes introduced by Royal Decree 3 / 2016, of Dec. 02, in relation to the tax treatment of portfolio impairment losses, which affect their reversal and the tax deduction of portfolio impairments.
We remind you that this is a new treatment that partially entered into force in fiscal years started as from Jan. 01, 2016, despite the fact that the measure was introduced through the mentioned regulations of Dec. 02, 2016.

Let’s see which are its main guidelines.
✔  The tax treatment of portfolio impairment

The tax measures that are dealt with in the ICAC Resolution are the following ones:

From Jan. 01, 2016: losses deriving from portfolio impairment that were considered as tax –deductible prior to Jan. 01, 2013, have to be reversed and included as taxable profits within the subsequent five fiscal years, despite the fact that the general reversal rules that were previously in force apply. If the portfolio is transferred, then the amounts pending reversal shall be taxed up to the limit of the positive difference resulting from the transfer.
From Jan. 01, 0217: impairment losses are ruled as a non – deductible, whenever they related to affiliated entities whose shareholding qualifies for the exemption of article 21 of Spanish Corporate income tax Law or that do not comply with the minimum required level of taxation, when they are not resident. It is, therefore, not possible to recover the loss that may have been disallowed in the past, from a tax view – point.

✔  How the mandatory reversal has to be treated, from an accounting view – point

Due to the new qualification of portfolio impairments as non tax – deductible, the book to tax adjustments that need to be done in the following four years have to be qualified, for accounting purposes, as a permanent difference. Such a difference affects the current Corporate income tax expense and does not, therefore, generate any deferred tax liability. As exceptional cases, the company could have recognised a deferred tax liability based on the previous tax regulations or foresee the liquidation of the subsidiary, in which case the recognition of a deferred tax asset would be justified.

✔  How portfolio impairment losses are treated, for accounting purposes

As these losses are no longer tax – deductible, the temporary difference that may have been recognised in the past has to be re – qualified as permanent difference. At the closing of fiscal year 2016, any deferred tax asset should be cancelled, unless its reversal is likely due to the subsidiary’s extinction.


PBS is your outsourcing partner for managing taxes in Spain

CONTACT

MADRID
Pedro Teixeira 8, planta 4ª, 28020
T+34 91 192 21 22

MAP

BARCELONA
General Mitre 28-30 08017.
T+34 93 363 65 10

MAP

Based in Barcelona and Madrid. Englobally is our Latin American business partner established in Santiago de Chile.

We are also part of Englobally Group, an international association of independent accounting and advisory firms that provide a one-stop shop managed solution for accounting, payroll and HR needs, with member firms in over 25 countries and associates working in many others. Many fast growing technology and lifescience businesses find their international services invaluable. Companies in many other sectors are attracted by the close and supportive way Englobally Group works.

Name

E-mail

Message

Please type the code below

captcha

  • Este sitio web utiliza Cookies de terceros y de análisis, para recopilar información con la finalidad de mejorar nuestros servicios, así como para analizar sus hábitos de navegación. Si continúas navegando, supone que aceptas expresamente la instalación de las mismas. Tienes la posibilidad de configurar tu navegador pudiendo, si así lo deseas, impedir que sean instaladas en tu dispositivo, aunque deberás tener en cuenta que dicha acción podrá ocasionar dificultades de navegación de la página web.

  • De conformidad con lo establecido en la normativa vigente en materia de Protección de Datos de Carácter Personal, le informamos que sus datos serán incorporados al sistema de tratamiento titularidad de PROFESSIONAL BOOKKEEPING SERVICES S.L. con CIF B59830638 y domicilio social sito en RONDA DEL GENERAL MITRE 28 08017, BARCELONA, con la finalidad de atender sus consultas. En cumplimiento con la normativa vigente, PROFESSIONAL BOOKKEEPING SERVICES S.L. le informa que sus datos serán conservados durante el plazo estrictamente necesario para cumplir con las acciones mencionadas con anterioridad.

    Salvo comunicación contraria por su parte, entenderemos que sus datos no han sido modificados, que usted se compromete a notificarnos cualquier variación respecto de los mismos, y que usted da su expreso consentimiento para que PROFESSIONAL BOOKKEEPING SERVICES, S.L. utilice los mencionados datos para las finalidades mencionadas.

    PROFESSIONAL BOOKKEEPING SERVICES S.L. le informa que procederá a tratar los datos de manera lícita, leal, transparente, adecuada, pertinente, limitada, exacta y actualizada. Es por ello que PROFESSIONAL BOOKKEEPING SERVICES S.L. se compromete a adoptar todas las medidas razonables para que estos datos se supriman o rectifiquen sin dilación cuando sean inexactos.

    De acuerdo con los derechos que le confiere la normativa vigente en materia de protección de datos podrá ejercer los derechos de acceso, rectificación, limitación de tratamiento, supresión, portabilidad y oposición al tratamiento de sus datos de carácter personal, así como del consentimiento prestado para el tratamiento de los mismos, dirigiendo su petición a la dirección postal indicada más arriba o al correo electrónico info@pbs.es.

    Podrá dirigirse a la Autoridad de Control competente para presentarla reclamación que considere oportuna.

    El envío de estos datos, implica la expresa aceptación de esta cláusula.

  • Pursuant to current Personal Data Protection Regulations, you are hereby informed that your data will be included in a processing system owned by PROFESSIONAL BOOKKEEPING SERVICES S.L. with Tax ID No. B59830638, with its registered address at RONDA DEL GENERAL MITRE 28, 08017 BARCELONA (SPAIN), in order to deal with your questions and requests. In compliance with current regulations, PROFESSIONAL BOOKKEEPING SERVICES S.L. hereby informs you that your data will be kept for as long as is strictly necessary to complete the aforementioned action.

     

    Unless otherwise stated, we will consider that your data have not been modified, that you undertake to inform us of any modifications thereto, and that you give your express consent for PROFESSIONAL BOOKKEEPING SERVICES, S.L. to use said data for the specified purposes.

     

    PROFESSIONAL BOOKKEEPING SERVICES S.L. informs you that it will proceed to process your data in a lawful, loyal, suitable, relevant, limited, exact and updated manner. Therefore, PROFESSIONAL BOOKKEEPING SERVICES S.L. undertakes to apply all reasonable measures to ensure that any incorrect data are deleted or corrected without delay.

     

    According to the rights granted to you under current data protection regulations, you will be entitled to exercise your rights of access, rectification, limitation on processing, suppression, portability or opposition regarding the processing of your personal data and your consent to the same, by addressing a written request to the postal address provided above or to the email address info@pbs.es.

    By sending these data, you are expressly accepting this clause.