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Form 100. Personal Income Tax Declaration 2019

Losses due to debtor insolvencies

Losses due to credit impairment

Losses due to deterioration of credits derived from possible insolvencies of debtors will be deductible when, at the time of accrual of the tax, any of the circumstances provided for in Art. 13 of the LIS, this is:

  1. That the period of 6 months has elapsed since the expiration of the obligation.

  2. That the debtor is declared to be in bankruptcy proceedings.

  3. That the debtor is being tried for asset stripping.

  4. That the obligations have been claimed by the courts or are in litigation or arbitration proceedings, the solution of which depends on their collection.

In the case of small companies, the owners may also deduct the loss due to deterioration of credits due to possible insolvencies of debtors up to the limit of 1% on the debtors existing at the conclusion of tax period, except those for which the loss due to bad debts had been recognized individually and those for which impairment losses are not deductible.

Losses due to credit impairment will not be deductible when:

  1. Credits are owed by public law entities unless they are the subject of an arbitration or judicial procedure regarding their amount or existence.

  2. Credits owed by related persons or entities, unless they are in bankruptcy and the liquidation phase has occurred in the terms provided in the Bankruptcy Law.

  3. Those corresponding to global estimates of the risk of insolvencies of clients and debtors.

Losses due to impairment of the value of other assets (Art. 13 and 20 of the LIS)

Losses due to deterioration of tangible assets, real estate investments and intangible assets, including goodwill, will not be deductible.

The impairment of property, plant and equipment, investment property and intangible assets is not tax deductible in the tax period in which the loss of value occurs. However, article 20 of the LIS allows the amount of this impairment to be integrated into the tax base of the tax periods remaining in the useful life of the asset if it is amortized, unless it is previously transferred or derecognised or not. is amortizable, in which case, it will be integrated on the occasion of the same.