4.2.55 Codes 00373 and 00374 charitable-social work of savings banks and banking foundations (Article 24 LIS)

In application of the provisions of article 24 of the LIS , savings banks and banking foundations must make the following adjustments in codes [00373] and [00374] "Social-charitable work of savings banks and banking foundations (art. 24 LIS)":

• According to the provisions of article 24.1 of the LIS, the amounts that savings banks and banking foundations allocate from their results to the financing of charitable-social works will be tax deductible, in accordance with the regulations by which they are governed.

  In this regard, article 24.2 of the LIS establishes that the amounts assigned to the charitable-social work of savings banks and banking foundations must be applied, at least, 50 percent, in the same tax period to which the allocation corresponds, or in the immediately following one, to the realization of the affected investments, or to cover maintenance expenses of the institutions or establishments covered by it.

  Consequently, savings banks and banking foundations must include in the [00374] reduction key the amounts they allocate from the results of the fiscal year corresponding to the tax period subject to declaration to the financing of charitable-social works.

• Article 24.3 of the LIS establishes that the following will not be included in the tax base:

  1. The maintenance expenses of the charitable-social work that are charged to the social work fund, even if they exceed the allocations made, without prejudice to the fact that they are considered to be the application of future allocations. However, such expenses will be tax deductible when, in accordance with the applicable accounting regulations, they are recorded against the profit and loss account.

  2. Income derived from the transfer of investments allocated to charitable-social work.

     According to the provisions of this article 24.3 of the LIS, savings banks and banking foundations must include in the key [00373] of increases, the amount of the maintenance expenses of the charitable-social work in the tax period of its accrual, and in the key [00374] of decreases, the amount of the income derived from the transfer of investments affected by the charitable-social work in the tax period of the accrual of said income.

• Finally, article 24.4 of the LIS establishes that the provision to social-welfare work made by banking foundations or, where appropriate, the maintenance costs of the social-welfare work that, in accordance with the applicable accounting regulations, are recorded against the profit and loss account, may reduce the taxable base of the credit institutions in which they participate, in the proportion that the dividends received from the aforementioned entities represent with respect to the total income of the banking foundations, up to the maximum limit of the aforementioned dividends.

In order to apply this reduction, the banking foundation must inform the credit institution that paid the dividends of the amount of the reduction thus calculated and the non-application of said amount as a tax-deductible item in its declaration of this Tax.

Therefore, savings banks and banking foundations must include in the [00373] increase code the amount of the contribution to the charitable-social work, or where appropriate, the amount of their maintenance expenses that exceeds the maximum limit of the aforementioned dividends.