7 August, 2013

Spanish Corporation Tax Rules, Tricks & Tips, (II)

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As said in our previous post, in PBS one of our focuses is to assist our clients on their day-to-day compliance needs.

Today, we wish to inform you on the main aspects you should be taking into account in your 2013 Spanish Corporation tax, relating to financial issues.

✔ Thin capitalisation rule:

The tax deduction of financial expenses is disallowed when they exceed the limit of 30 per cent of the fiscal year’s operating profit, (a sort of EBITDA, as defined by the fiscal regulations).
This rule operates as a tax deferral system since the interest corresponding to the non-deductible excess can be deducted in the subsequent 18 years.
The Law also foresees the possibility to carry forward the unused limit in a given fiscal year to the following 5 years.
In any case, taxpayers can yearly deduct up to one million Euros.

✔ Intra group leveraged transactions:

Financial expenses deriving from intra-group debts relating to:
1. The acquisition of shares from Group companies; or,
2. The subscription of a share capital increase in Group companies,
with no economic substance, are not tax deductible.

Such rule does not apply if the taxpayer can prove that there are sound economic reasons to carry out the particular transaction.

We recommend taxpayers pretending to perform an intra-group restructuring, which should not be regarded as unusual considering our economic context, preparing a defence file to sustain the existence of the underlying non-tax reasons.

Foto: Carlos Javier Perez

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