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Practical Handbook for Companies 2021

General considerations

article 11.1 of the LIS states that income and expenses arising from transactions or economic events shall be allocated to the tax period in which they accrue, in accordance with accounting regulations, irrespective of the date of payment or collection, respecting the due correlation between them.

Therefore, for tax purposes, the rule establishes the accrual principle as the general criterion for allocating income and expenses.

This tax criterion coincides with the accounting criterion set out in Article 38(d) of the Commercial Code, which stipulates that expenses and income relating to the financial year to which the annual accounts relate shall be allocated to the financial year to which they relate, irrespective of the date on which they are paid or collected.

Remember:

article 11.2 of the LIS establishes that the tax effectiveness of criteria for the temporary allocation of income and expenses other than the accrual principle, used exceptionally by the taxpayer for the purpose of achieving a true and fair view of the assets, financial situation and results, in accordance with the provisions of articles 34.4 and 38.i) of the Commercial Code, is subject to approval by the tax authorities, in the manner to be determined by regulations.

In relation to the accrual principle, article 11.3.1 of the LIS includes the principle of accounting registration according to which expenses that have not been booked in the profit and loss account or in a reserve account will not be tax deductible if so established by law or regulation, with the exception of the provisions of the Tax Law with respect to assets that can be depreciated freely or on an accelerated basis.

Income and expenses recognised for accounting purposes in the profit and loss account or in a reserve account in a tax period other than that in which they are recognised for tax purposes, in accordance with the provisions of Article 11(1) and (2) of the LIS, shall be recognised in the corresponding tax period in accordance with the provisions of those paragraphs.However, in the case of expenses booked in these accounts in a tax period subsequent to that in which they are temporarily booked or of income booked in these accounts in an earlier tax period, the temporary booking of both shall be made in the tax period in which they are booked, provided that this does not result in a lower taxation than that which would have been applicable by application of the rules of temporary booking provided for in the previous paragraphs.

Filling in form 200

In relation to the above, the following corrections will have to be made in the boxes [00361] and [00362] "Other differences in the temporary allocation of income and expenses (art. 11 LIS)" on page 12 of form 200:

  • If an expense is booked in the profit and loss account or in a reserve account in a tax period prior to that in which it should be booked, an adjustment should be made so that it is booked in the accruals period rather than in that period.

    Therefore, if this expense has been accounted for in the profit and loss account, an adjustment for increases should be made in box [00361]. Sin embargo, en el caso de que dicho gasto se haya contabilizado en una cuenta de reservas, no habrá que aumentar la base imponible puesto que su importe no está incluido en el resultado contable.Likewise, in the tax period in which the accrual of this expense occurs, a correction must be made for a decrease in the box [00362], regardless of the account in which they have been recorded.

  • Income booked in the profit and loss account or in a reserve account in a tax period prior to that in which it is temporarily booked shall be booked for tax purposes in the tax period in which it is booked, provided that this does not result in taxation at a lower rate than that which would have been applicable under the general rules for temporary booking.

    En este caso, si el ingreso se ha imputado contablemente en la cuenta de pérdidas y ganancias, no habrá que realizar ajuste alguno.On the other hand, if this income has been booked to a reserve account, an adjustment for increases must be made in the tax period in which it is booked in box [00361].

  • Expenses that are booked in the profit and loss account or in a reserve account in a tax period subsequent to that in which they are temporarily allocated shall be allocated for tax purposes in the tax period in which they are booked, provided that this does not result in taxation at a lower rate than that which would have been applicable under the general rules for temporary allocation.

    En este caso, si el gasto se ha imputado contablemente en la cuenta de pérdidas y ganancias, no habrá que realizar ajuste alguno.On the other hand, if this expense has been booked in a reserve account, a correction for decrease must be made in the tax period in which it was booked in box [00361].

  • Income that has been booked to the profit and loss account or to a reserve account in a financial year subsequent to that in which it is temporarily booked, shall give rise to an adjustment for decreases in box [00362] only when it has been booked to the profit and loss account in the year in which it is booked.However, if such income has been recorded in a reserve account, the tax base does not have to be reduced, as the amount is not included in the accounting result.Likewise, in the tax period in which they accrue for tax purposes, which will be prior to the period in which they are entered in the accounts, an adjustment for increases must be made in box [00361], regardless of the account in which they are entered in the accounts.