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Practical Income Manual 2021.

Special tax imputation criteria provided for in the Corporate Tax Law and the Personal Income Tax Law

The Corporate Tax Law and the Personal Income Tax Law establish, in certain cases, special tax imputation criteria that are different from the general accrual criteria discussed above. These assumptions are, among others, the following:

• Allocation of public aid for the first installation of young farmers provided for in the National Rural Development Framework of Spain 

Regulations: Art. 14.1.b) Law Personal Income Tax

From January 1, 2020, public aid for the first installation of young farmers provided for in the National Rural Development Framework of Spain may be attributed as income from economic activities in quarters, in the tax period in which they are obtained and in the next three.

The modification of article 14.1.b) of the Personal Income Tax Law by article 2 of Royal Decree-Law 5/2020, of February 25, by which certain urgent measures are adopted in regarding agriculture and food ( BOE of 26), responded to the need to provide a solution to the widespread concern that existed in the agricultural sector due to the change in tax classification of subsidies to incorporation of young farmers derived from the National Rural Development Framework. Qualification that was making it difficult for some young farmers to access these subsidies, and thereby discouraging an essential measure in the process of renewal of the production process. While the National Framework for the period 2007-2013 contemplated aid for the installation of young farmers, as measures intended for investments and installation costs, the National Framework 2014-2020 conditions them directly to the development of a business plan. As a consequence of the above, fiscally they have gone from being considered capital subsidies to current subsidies as income aid, forcing the recipient to have to compute it in its entirety as one more income for the period in which it accrues (that is, when it is recognized and quantifies) without the possibility of splitting the payment throughout the four-year period of receipt. With this measure, which came into force on January 1, 2020, regardless of its classification, it is allowed to be allocated in quarters, which responds to the problem raised.

• Special cases of integration of income pending imputation

Regulations: Art. 14.3 and 4 Personal Income Tax Law

In the event that the taxpayer loses his status due to a change of residence, all income pending imputation must be integrated into the tax base corresponding to the last tax period that must be declared for this tax, carrying out, where appropriate, complementary self-assessment without penalty or late payment interest or any surcharge.

Now, if the transfer of residence occurs to another Member State of the European Union, the taxpayer may choose to allocate the pending income in accordance with the provisions of the previous paragraph, or to present it as each of them is obtained. the income pending imputation, a complementary self-assessment without penalty, late payment interest or any surcharge, corresponding to the last period that must be declared for this Tax. The self-assessment will be submitted within the declaration period of the tax period in which said income would have been allocated if the loss of taxpayer status had not occurred.

Therefore, according to this last rule, when the taxpayer loses his status in 2022, the tax period to which the complementary self-assessment will correspond will be 2021, as it is the last period in which he has had the status of taxpayer. IRPF ##1##.

• Installment operations

Regulations: 14.2.d) Law Personal Income Tax and 11.4 LIS

In the case of installment operations or with a deferred price, the income will be understood to be obtained proportionally as the corresponding payments become payable, unless the taxpayer decides to allocate them at the time of the birth of the right (accrual criterion).

Consequently, the imputation must be made as the initially agreed deadlines expire and payment becomes due, regardless of whether or not once the expiration date is reached, they are collected.

Transactions in installments or with a deferred price are understood to be those whose consideration is payable, in whole or in part, through successive payments or through a single payment, provided that the period elapsed between the accrual and the expiration of the last or only installment is greater than one year. .

If the endorsement, discount or advance collection of the deferred amounts occurs, the income pending imputation will be deemed to have been obtained at that time.

The expense corresponding to the deterioration in the value of the unpaid credit right will not be tax deductible with respect to that amount that has not been included in the tax base until this is done.

Therefore, only the expense corresponding to the amount due and not collected is tax deductible.

The provisions of this section will apply regardless of the way in which the income and expenses corresponding to the affected income were recorded.

• Reversal of expenses that have not been tax deductible

Regulations: Art. 11.5 LIS

Income that comes from the reversal of expenses that have not been tax deductible will not be included in the tax base.

• Reversal of the deterioration of elements that have been subject to value corrections

Regulations: Art. 11.6 LIS

The reversal of an impairment or value correction of any asset element that has been tax deductible will be charged to the tax base of the tax period in which said reversal occurred.

The same rule will be applied in the event of losses derived from the transfer of assets that have been acquired again.