Integration and compensation of income in the taxable savings base
Regulations: Art. 49, Additional Provision thirty-ninth.1; and seventh transitional provision.5 Law IRPF
The integration and compensation of income in the taxable savings base is carried out, in a similar way to that discussed in the previous section, in two phases: The first is intended to determine the taxable base of the savings obtained in the tax period itself, and the second is to offset the negative items from previous years that are pending offset against the positive balance, if any, obtained.
Phase 1. Integration and compensation of income obtained in the tax period
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The returns on movable capital that make up the taxable savings base (those derived from participation in the equity of entities, from the transfer of equity to third parties, from capitalization operations, from life or disability insurance contracts and income resulting from the imposition of capital) are integrated and offset exclusively among themselves in each tax period , resulting in a positive or negative balance.
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The positive balance resulting from said compensation is integrated into the taxable savings base, without prejudice to the compensation discussed below.
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The negative balance is offset by the positive balance of capital gains and losses arising from the transfer of assets that are part of the taxable savings base, obtained in the same tax period, with a limit of 25 percent of said positive balance .
If after such compensation there is a negative balance, its amount will be compensated in the following four years in the same order established in the previous paragraphs.
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Capital gains and losses arising from the transfer of assets , regardless of their period of permanence, are integrated and offset exclusively among themselves in each tax period, resulting in a positive or negative balance.
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The positive balance resulting from said compensation is integrated into the taxable savings base, without prejudice to the compensation regime discussed below.
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The negative balance will be offset against the positive balance of the capital gains included in the savings tax base, obtained in the same tax period, with a limit of 25% of said positive balance .
If after said compensation there is a negative balance, its amount will be compensated in the following four years in the same order established in the previous paragraphs.
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The above offsets must be made in the maximum amount permitted in each of the following years and may not be made outside the aforementioned period by accumulating them with negative income from subsequent years.
Phase 2. Offsetting negative items outstanding from previous years
Negative items from previous years pending compensation
Negative items from previous years pending offset as of January 1, 2024 may be:
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Negative balances of capital gains from 2020, 2021, 2022, and 2023 pending offset as of January 1, 2024, to be included in the savings tax base.
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Negative balances of capital gains and losses for 2020, 2021, 2022 and 2023, pending offset as of January 1, 2024, to be included in the savings tax base
Rules for offsetting negative items from previous years
The above negative balances are offset in the order and manner set out below:
1. Offsetting the negative items pending from previous years with their respective positive balance of income or profits and losses for the year
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The positive balance of income from movable capital for the 2024 financial year, after reducing said balance by the offset of capital losses corresponding to the 2024 financial year, will be offset by the taxpayer with the balance of negative income from movable capital pending offset from the financial years 2020, 2021, 2022 and 2023.
Regarding the latter, you should keep in mind that it includes all negative capital gains pending offset from the years 2020, 2021, 2022, and 2023, including those derived from subordinated debt or preferred shares.
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The positive balance of profits and losses for the 2024 financial year, once said balance has been reduced by the offset of the negative balance, if any, of income from movable capital obtained in the 2024 financial year, will be offset by the taxpayer with the balance of losses pending offset from the 2020, 2021, 2022 and 2023 financial years.
Regarding the latter, it should be noted that it includes all outstanding capital losses from the years 2020, 2021, 2022, and 2023, including those arising from subordinated debt or preferred shares.
In no case will compensation be made outside the four-year period, by accumulating negative net balances or capital losses from subsequent years.
Note: Annex “C” in the declaration model includes, in relation to the integration and compensation of income, information relating to losses and negative capital gains pending compensation in the following years.
2. Offsetting of the remaining negative balances of capital gains and outstanding gains and losses from previous years not offset
If there are negative balances of income from movable capital for the years 2020, 2021, 2022 and 2023 , which have not been offset as indicated above, they will be offset by the remaining positive balance, if any, of capital gains for the year 2024 up to the limit of 25% of the aforementioned positive balance.
This offset, together with the offset of negative balances of capital gains for 2024, may not jointly exceed the limit of 25 percent of the positive balance of profits and losses for 2024.
The same will apply if there were negative balances of capital gains and losses from the years 2020, 2021, 2022 and 2023 that have not been offset, in which case, they will be offset by the remaining positive balance, if any, of income from movable capital from the year 2024, up to the limit of 25% of the aforementioned positive balance.
This offset, together with the negative balances of profits and losses for 2024 that are offset against the positive balance of income from movable capital for 2024, may not jointly exceed the limit of 25 percent of the positive balance of income from movable capital for 2024 before offsets.
The operations of integration and compensation of income in the taxable base of savings that have been discussed are collected, graphically, in the following table: