Special tax imputation criteria provided for in the Corporate Tax Law and the Personal Income Tax Law
Law LIS and Law IRPF establish, in certain cases, special tax imputation criteria different from the general accrual criterion previously discussed. These assumptions include, among others, the following:
• Allocation of public aid for the first installation of young farmers provided for in the National Framework for Rural Development of Spain
Regulations: Art. 14.1.b) Law Income Tax
From 1 January 2020, public aid for the first installation of young farmers provided for in the National Framework for Rural Development of Spain may be imputed as income from economic activities in quarters, in the tax period in which they are obtained and in the three following ones.
The amendment to article 14.1.b) of the Personal Income Tax Law by article 2 of Royal Decree-Law 5/2020, of 25 February, adopting certain urgent measures in the field of agriculture and food ( 26 February), responded to the need to resolve the widespread concern that existed in the agricultural sector over the change in the tax classification of subsidies for the incorporation of young farmers derived from the National Rural Development Framework. This was making it difficult for some young farmers to access these subsidies, thereby discouraging an essential measure in the process of renewing the production process. While the National Framework for the period 2007-2013 contemplated aid for the establishment of young farmers as measures aimed at investments and installation costs, the National Framework 2014-2020 directly conditions them to the development of a business plan. As a result of the above, from a tax point of view, they have gone from being considered capital subsidies to current subsidies as income support, forcing the recipient to have to compute it in its entirety as another income for the period in which it accrues (that is, when it is recognized and quantified) without the possibility of splitting the payment over the four-year period of receipt. This measure, which came into force on 1 January 2020, allows for the allocation of quarters, regardless of the classification, which addresses the problem raised.
• Special cases of integration of income pending imputation
Regulations: Art. 14.3 and 4 Law IRPF
In the event that the taxpayer loses his status due to a change of residence, all income pending imputation must be included in the tax base corresponding to the last tax period to be declared for this tax, with a supplementary self-assessment being made, where appropriate, without any penalty, late payment interest or surcharge.
However, if the change of residence occurs to another Member State of the European Union, the taxpayer may choose to impute the pending income in accordance with the provisions of the previous paragraph, or to present, as each of the pending income to be imputed is obtained, a supplementary self-assessment without penalty, late payment interest or any surcharge, corresponding to the last period that must be declared for the IRPF . The self-assessment must be submitted within the declaration period for the tax period in which said income should have been imputed had the loss of taxpayer status not occurred.
Therefore, according to this last rule, when the taxpayer loses his status in 2024, the tax period to which the supplementary self-assessment will correspond will be 2023, as it is the last period in which he had the status of IRPF taxpayer.
• Term operations
Regulations: 14.2.d) Law IRPF and 11.4 LIS
In the case of installment or deferred price transactions, the income will be deemed to be obtained proportionally as the corresponding payments become due, unless the taxpayer decides to allocate them at the time the right arises (accrual criterion).
Consequently, the imputation must be made as the initially agreed terms expire and payment becomes due, regardless of whether or not payment is collected once the due date has been reached.
Deferred payment transactions 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 between the accrual and the maturity of the last or only installment is greater than one year.
In the event of an endorsement, discount or advance collection of the deferred amounts, 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, provided that the causes provided for in article 13.1 of the LIS are present.
The provisions of this section shall apply regardless of the manner 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 from the reversal of expenses that have not been tax deductible will not be included in the tax base.
• Reversal of impairment of items that have been subject to value corrections
Regulations: Art. 11.6 LIS
The reversal of a deterioration or correction in the value of any asset that has been tax deductible will be allocated to the tax base of the tax period in which said reversal occurred.
The same rule will apply in the case of losses arising from the transfer of assets that have been newly acquired.