4.2.71 Codes 00323 and 00324 small companies, losses due to impairment, credits, insolvencies (Art. 104 LIS)

According to the provisions of article 104 of the LIS , in the tax period in which the conditions of article 101 of the LIS are met, entities may deduct the loss due to impairment of credits to cover the risk derived from possible insolvencies up to the limit of 1 percent on the debtors existing at the end of the tax period.

For these purposes:

• The debtors referred to above shall not include debtors for whom a loss due to impairment of credits due to bad debts established in article 13.1 of the LIS has been recognised, as well as those whose impairment losses are not deductible in accordance with the provisions of this last article.

• The balance of the impairment loss realized as indicated may not exceed the aforementioned limit.

In tax periods in which the conditions of article 101 of the LIS are no longer met, losses incurred in these tax periods due to impairment of credits to cover the risk arising from possible insolvency of debtors will not be deductible up to the amount of the balance of the impairment loss referred to in the first paragraph of this section.

In accordance with the above, entities that meet the conditions of article 101 of the LIS must include in key [00323] (increases) the amount of the excess of impairment losses recorded over those tax deductible in the tax period subject to declaration. And in the event of reversal of impairment losses, in the amount that has been subject to tax correction of increase in previous tax periods, they must be included in key [00324] (decreases) in the tax period of reversal.