Skip to main content
Practical Income Manual 2022.

8. Losses due to impairment of credits derived from possible insolvencies of debtors

Concept of impairment losses

Impairment is the accounting expression of the estimated loss in value of an asset, different, in the case of amortizable elements, from its systematic depreciation due to operation, use, obsolescence or enjoyment (that is, amortization expense).

From an accounting point of view, an asset is considered impaired when its book value is greater than its recoverable amount, a circumstance that requires recognition of an impairment loss in the profit and loss account and the corresponding valuation adjustment.

See the Resolution of September 18, 2013, of the Accounting and Auditing Institute, which establishes registration and valuation standards and information to be included in the annual accounts report on the impairment of the value of assets (BOE of September 25).

However, for tax purposes the general rule is the non-deductibility of impairment losses with one exception: losses due to deterioration of credits derived from possible insolvencies of debtors.

Losses due to impairment of credits derived from possible insolvencies of debtors

Regulations: Articles 13.1 LIS  

Losses due to impairment of credits derived from possible insolvencies of debtors will be deductible in 2022, when at the time of accrual of Personal Income Tax (normally, December 31) any of the following conditions apply. following circumstances:

  1. That the period of six months has elapsed since the expiration of the obligation.

  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 judicially claimed or are the subject of a judicial dispute or arbitration procedure on the solution of which their collection depends.

The following losses due to credit impairment will not be deductible:

  1. Those corresponding to credits owed by public law entities, unless they are the subject of an arbitration or judicial procedure regarding their existence or amount.

  2. Those corresponding to credits owed by related persons or entities, unless they are in bankruptcy and the liquidation phase has been opened by the judge, in the terms established in Law 22/2003, of July 9, Bankruptcy. and, since September 1, 2020, in Royal Legislative Decree 1/2020, of May 5, which approves the consolidated text of the Bankruptcy Law.

  3. Those corresponding to global estimates of the risk of insolvencies of clients and debtors.

Note: See in this regard the Resolution of September 18, 2013, of the Accounting and Audit Institute, which establishes registration and valuation standards and information to be included in the annual accounts report on the impairment of the value of assets. (BOE of September 25).

Note: The owners of small companies may, in addition, deduct the loss due to deterioration of credits due to possible insolvencies of debtors up to the limit of 1% of the existing debtors at the conclusion of the tax period, except for those for which it had been recognized. on an individualized basis the loss due to insolvencies and those in respect of which the losses due to impairment are not deductible. The determination of the deductible amount corresponding to these impairment losses for owners of small companies is discussed in this same Chapter.

Transitional regime for the reversal of the impairment of value of certain assets

Regulations: Fifteenth transitional provision LIS

The reversal of losses due to impairment of property, plant and equipment and real estate investments, intangible assets that would have been tax deductible in tax periods beginning prior to January 1, 2015, will be integrated as income in the tax period in which the recovery of their assets occurs. value in the accounting field.

In the case of intangible assets with an indefinite useful life, the aforementioned reversal will be integrated with the limit of the tax value that the intangible asset would have, taking into account that in article 13.3 of the LIS , in force until December 31, 2015, established that the deducted amounts would reduce, for tax purposes, the value of the corresponding intangible assets.

Note: Until December 31, 2015, intangibles with an indefinite useful life, including goodwill, were not amortized for accounting purposes, but their impairment was taken into account, allowing them to deduct, for tax purposes, their acquisition price with the maximum annual limit of one twentieth of its amount. This deduction that corrected its tax value was not conditional on its accounting allocation in the profit and loss account.