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Practical Handbook for Companies 2021

Reduction due to compulsory endowment to the mandatory reserve fund (art. 16.5 Law 20/1990)

Article 58.1 of Law 27/1999 establishes that, of the surpluses taken into account for the determination of the cooperative result, after deducting losses of any kind from previous years and before taking into account corporate income tax, at least 20 per cent shall be allocated to the Mandatory Reserve Fund.

Article 58.2 of Law 27/1999 stipulates that at least 50% of extra-cooperative and extraordinary profits, after deducting losses of any kind from previous years and before corporate income tax is taken into account, must be allocated to the mandatory reserve fund .

For settlement purposes, in accordance with the provisions of Article 16.5 of Law 20/1990, in order to obtain the taxable income corresponding to both types of results to be taxed, will be reduced by 50 per cent of the part of the same that is obligatorily allocated to the Mandatory Reserve Fund.

Therefore, for accounting purposes the statutory mandatory allocation of 20 per cent to the Mandatory Reserve Fund must be made on the basis of the surpluses recorded in the accounts of the cooperative result, after deduction of losses from previous years and before taking corporate income tax into account.For the extra-cooperative results this should be done in the same way, but taking into account that the legal obligation to contribute to this mandatory fund is 50 per cent.

For tax purposes, cooperative companies will have to reduce the taxable base corresponding to the cooperative result and the extra-cooperative result by 50 per cent of the part of these that has been compulsorily allocated to the Mandatory Reserve Fund (i.e. 20 per cent in the case of cooperative results and 50 per cent in the case of extra-cooperative results).

This reduction must be made by means of negative off-balance sheet adjustments, by entering in the box [C9], 50 per cent of the part of the cooperative's results that must be allocated to the Mandatory Reserve Fund.The same applies to box [E9] corresponding to extra-cooperative results.

A tener en cuenta:

The boxes [C9] and [E9] have correlation with the box [00400] "Cooperatives":Mandatory reserve fund (Law 20/1990)" on page 13 of Form 200, so that the sum of the amounts entered in boxes [C9] and [E9] shall be transferred to box [00400].