Skip to main content
Form 100. 2020 Personal Income Tax Return Declaration

Losses due to debtor insolvency

Credit impairment losses

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

  1. That the period of 6 months has elapsed since the expiration of the obligation. For taxpayers considered to be small companies, the deadline will be 3 months.

  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 impairment of credits for possible insolvency of debtors up to the limit of 1% of the debtors existing at the end of the tax period, except for those for which the loss due to insolvency has been individually recognised and those for which the impairment losses are not deductible.

due to impairment of credits will not be deductible when:

  1. The credits are owed by public law entities unless they are the subject of an arbitration or judicial procedure that deals with their amount or existence.

  2. Credits owed by related persons or entities, unless they are in a situation of bankruptcy and the liquidation phase has taken place in accordance with the terms provided for in the Bankruptcy Law.
  3. Those corresponding to global estimates of the risk of insolvency of clients and debtors.

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

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

The impairment of tangible fixed assets, real estate investments and intangible fixed assets is not tax deductible in the tax period in which the loss in value occurs. However, Article 20 of the LIS allows the amount of this impairment to be included in the tax base of the tax periods remaining in the useful life of the asset if it is depreciated, unless it is the subject of a prior transfer or write-off or is not depreciable, in which case it will be included in the transfer or write-off.