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Practical Handbook for Companies 2021

Foreign tax paid by the taxpayer, non-deductible due to affecting income with deductions for double taxation

In application of the provisions of article 31.2 of the LIS, the taxpayer must make the following adjustments in the boxes [00340] and [01589] "Foreign tax borne by the taxpayer, not deductible because it affects income with double taxation deduction (art. 31.2 LIS)" on page 13 of form 200:

  • Insofar as it affects positive income included in the tax base, obtained and taxed abroad for a tax (recorded as an expense) of an identical or similar nature to corporation tax, and in relation to this income the taxpayer is entitled to the deduction to avoid international double taxation established in article 31.2 of the LIS, the amount of the tax paid abroad will be included in the box [00340], as a correction of increase, even if it is not fully deductible in the full tax liability.

    For these purposes, will be considered a deductible expense that part of the amount of tax paid abroad that is not subject to double taxation deductions in the gross tax liability by application of the provisions of article 31.1 of the LIS, provided that it corresponds to the performance of economic activities abroad.

  • In the box [01589] of decreases, the part of the tax paid abroad that has not generated a double taxation deduction because it exceeds the tax liability that would be applicable in Spain if the income had been obtained in Spanish territory, and provided that it corresponds to the carrying out of economic activities abroad, should be entered.

    This adjustment is made because article 31.2 of the LIS establishes that will be considered a deductible expense that part of the amount of tax paid abroad that is not subject to double taxation deductions in the gross tax liability by application of the provisions of article 31.1 of the LIS, provided that it corresponds to the performance of economic activities abroad.