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Practical Handbook for Companies 2021

Loss of value caused by fair value criteria

For tax periods beginning on or after 1 January 2017, an exception to the general rule established by article 17.1 of the LIS is introduced in article 15 l) of the LIS , according to which changes in value arising from the application of the fair value method have no tax effect until they are taken to the profit and loss account.

For this purpose, article 15 l) of the LIS establishes that . will not be deductible for decreases in value arising from the application of the fair value criterion corresponding to securities representing holdings in the capital or equity of entities that meet the requirements of article 15 k) of said Law, which are taken to the profit and loss account, unless a prior increase in value corresponding to homogeneous securities of the same amount, if any, has been included in the taxable base.

Filling in form 200

In application of the provisions of article 15.l) of the LIS, the taxpayer must include in the box [01808] "Decrease in value caused by the fair value criterion (art. 15 l) LIS)" on page 12 of form 200, the amount of the decrease in value caused by application of the fair value criterion corresponding to securities representing holdings in the capital or in the equity of entities that meet the aforementioned requirements.

Application of Article 15 k) LIS

If fulfils the two requirements of art. 21.1.a) LIS:

  • Stake ≥ 5% or V. Adq.> 20 M€ (Units acquired before 01-01-2021)
  • Seniority 1 year

It is not necessary for to comply with the requirements of art. 21.1.a) LIS:

  • Stake ≥ 5% or V. Adq.> 20 M€ (Units acquired before 01-01-2021)
  • Seniority 1 year
In addition, fulfils the requirement of art. 21.1.b) LIS, i.e. the investee is taxed
at nominal rate ≥ 10%.
But does not meet the requirement of art. 21.1.b) LIS, i.e. the investee entity is taxed
at nominal rate < 10%.
Then, Article 15 k) of the LIS applies.