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Practical Handbook for Companies 2021

Deductible financial expenses

Net financial expenses are deductible up to a limit of 30 per cent of the operating profit for the year.

For these purposes, it is necessary to take into account the following:

  • Net financial expenses shall mean the excess of financial expenses over income derived from the transfer to third parties of own capital accrued in the tax period, excluding those non-deductible expenses referred to in letters g) and h) of Article 15 of the LIS and Article 15 bis of the aforementioned Law.

  • The operating profit shall be determined on the basis of the operating result of the profit and loss account for the year determined in accordance with the Commercial Code and other implementing accounting regulations:

    • By eliminating the depreciation of fixed assets, the allocation of grants for non-financial and other fixed assets, impairment and gains or losses on disposals of fixed assets, and

    • Adding the financial income from holdings in equity instruments, provided that it corresponds to dividends or shares in the profits of entities in which either the direct or indirect percentage holding is at least 5 per cent, unless such holdings have been acquired with debts whose financial expenses are not deductible by application of article 15 h) of the LIS.

      A tener en cuenta:

      With effect for tax periods beginning on or after 1 January 2021, the addition of financial income from holdings in equity instruments corresponding to dividends shall not be taken into account in determining the operating profit when the acquisition value of such holdings is more than EUR 20 million, without reaching the aforementioned percentage of 5 per cent.