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Practical Manual for Companies 2020.

Compensation for converting deferred tax assets into credit payable to the Tax Agency

According to the provisions of article 130.1 of the LIS, deferred tax assets corresponding to provisions for impairment of credits or other assets arising from possible insolvencies of debtors not related to the taxpayer, not owed to public law entities and whose deductibility does not occur by application of the provisions of article 13.1.a) of this Law, as well as those derived from the application of sections 1 and 2 of article 14 of this Law, corresponding to provisions or contributions to social security systems and, where appropriate, early retirement, may be converted into a claim against the Tax Authority, for an amount equal to the positive net quota corresponding to the tax period in which those were generated. However, when the amount of the positive net tax of a given tax period is greater than the amount of deferred tax assets generated in the same referred to in the previous paragraph, the entity may have the right provided for in this article, for an amount equal to the excess, with respect to those assets of the same nature generated in previous tax periods or in the 2 subsequent tax periods. 

For the conversion to take place mentioned in the previous section, any of the circumstances listed in article 130.2 of the LIS must occur:

  1. That the taxpayer records accounting losses in its annual accounts, audited and approved by the corresponding body.

  2. That the entity is subject to liquidation or judicially declared insolvency.

The conversion of deferred tax assets into a claim against the Tax Authority will occur , as established in article 130.3 of the LIS, at the time of filing of the Corporate Tax self-assessment corresponding to the tax period in which the circumstances described in article 130.2 of the LIS have occurred.

Article 130.4 of the LIS establishes that entities that carry out the conversion of deferred tax assets under the terms established in sections 1 and 2 of article 130 of the LIS, may choose to offset said credits with other tax debts of a state nature that the taxpayer himself generates from the moment of the conversion, following the procedure established in article 69 of the RIS .

Filling in form 200

In the event that the entity opts for the offsetting of credits, it must record the amount corresponding to said offset in box [00506] "Offsetting for conversion of deferred tax assets into a payable credit against the Tax Authority (art. 130 LIS)" on page 14 bis of form 200:

  • In the event that the entity pays taxes exclusively to the State Administration, it must record the amount in box [01021] "Compensation for conversion of deferred tax assets into a claim against the Tax Administration (art. 130 LIS) (State)". In this case, the amount in box [01021] will match the amount in box [00506].

  • If the entity pays taxes to one or more Provincial Councils of the Autonomous Community of the Basque Country and/or the Foral Community of Navarre, it must enter the amount in box [01044] "Credit for conversion of deferred tax assets into a credit payable to the Tax Authority (art. 130 LIS) (Provincial Council/Navarre)". This box must be filled out on page 26 of form 200.