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Form 100. 2019 Personal Income Tax return

Tax deductible provisions

Normal Modality

The following expenses will not be deductible under the provisions item (article 14 Of the Spanish Corporation Tax Act)

  • Expenses for provisions and internal funds for the coverage of contingencies identical or similar to those covered by the revised text of the Pension Plans and Funds Regulation Act. These expenses will be tax deductible in the tax period in which the benefits are paid.
  • Expenses relating to long-term staff remuneration through defined contribution systems or defined benefit. However, contributions from pension plan developers regulated in the consolidated text of the Pension Plans and Funds Regulation Act, as well as those made to corporate social welfare plans, will be deductible. Contributions to cover contingencies similar to those of pension plans will also be deductible.
  • Expenses arising from implicit or tacit obligations
  • Those concerning the costs of fulfilling contracts that exceed the economic benefits expected to be received from them.
  • Restructuring derivatives, except if they refer to legal or contractual obligations and not merely tacit.
  • Those relating to the risk of sales refunds.
  • Personnel that correspond to payments based on equity instruments, used as remuneration for employees, and paid in cash.

Among others, they will be deductible (art.14 LIS)

  • Expenses corresponding to environmental actions when it corresponds to a plan formulated by the taxpayer and accepted by the Tax Administration.
  • The expenses inherent in the risks derived from guarantees for repairs and revision will be deductible up to the amount necessary to establish a provision not greater than the result of applying to sales with guarantees in force at the conclusion of the tax period a percentage determined by the cost of covering such guarantees in the tax period concerned and in the two previous periods as a proportion of sales backed by guarantees in these tax periods. This same rule will apply to provisions for the coverage of additional expenses for sales refunds.
  • Newly created entities may also deduct the aforementioned allowances for risks derived from the repair and review guarantees by setting the percentage mentioned above, with regard to the expenses and sales made in the tax periods that have elapsed.

Simplified Modality

All deductible provisions and expenses of difficult justification will be quantified exclusively by applying the percentage of 5 per 100 on the net positive return, excluding this concept, without the resulting amount being greater than 2,000 euros per year. The percentage of 5 per 100 is applied to activity, but the maximum amount that can be deducted by the taxpayer in all its activities for this concept cannot exceed 2,000 euros.

In the case of activities carried out through entities in the income allocation regime, the deduction for deductible provisions and expenses that are difficult to justify it will be applied individually by each taxpayer or member, heir, co-owner or participant on the net yield of the economic activity that corresponds to them, depending on of its percentage of participation in the company, applying the limit of 2,000 euros to this amount.

The percentage of 5 per cent for deductible provisions and expenses that are difficult to justify is incompatible with the application of the reduction planned for holders of economic activities carried out for a single customer. 100