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Practical Handbook for Companies 2021

Forward or deferred price transactions

The article 11.4 of the LIS establishes that in the case of transactions in instalments or with a deferred price, whose consideration is payable, in whole or in part, by successive payments or by a single payment, provided that the period elapsing between the accrual and the maturity of the last or single instalment is more than one year, the entity must allocate the aforementioned income proportionally as the corresponding collections become due in application of the collection criterion, unless the entity decides to apply the accrual criterion, in which case it must allocate all the corresponding income to the period in which it has accrued.

In the event of the endorsement, discount or early collection of the deferred amounts, the income pending imputation shall be deemed to have been obtained at that time.

Filling in form 200

In application of the above, in the boxes [00357] and [00358] "Instalment transactions (art. 11.4 LIS)" on page 12 of form 200, the positive or negative differences arising between the profits recorded in the profit and loss account for the financial year being declared and the amounts that are fiscally computable for such items, relating to the instalment transactions, or with deferred price, in respect of which the taxpayer has opted for a temporary allocation criterion for tax purposes different to that applicable by virtue of the accounting rules, must be entered.

Furthermore, article 11.4 of the LIS establishes that the impairment of the value of credits will not be deductible for tax purposes in respect of the amount that has not been included in the tax base by application of the criterion on instalment transactions established in this section, until such time as this is done.

According to the provisions of the previous paragraph, in the event that the taxpayer has opted to include in the tax base the income generated proportionally as the collections become due, if the deadline for collecting the deferred amount is not met, such income, provided that the requirements for deductibility are met in accordance with the provisions of Article 13 of the LIS, must be included in the tax base regardless of the collection, with the part of the impairment loss that has been recognised also being deductible, in the part corresponding to the uncollected amount.

Therefore, as the tax deductibility of the impairment of the value of the credits generated by forward transactions is deferred until the moment when the income is included in the tax base, in application of this principle, the taxpayer must make the appropriate adjustments to the accounting result in these boxes [00357] and [00358].

Transitional arrangements for instalment or deferred price transactions

The first transitional provision of the LIS establishes a transitional regime for instalment transactions, according to which in the case of instalment or deferred price transactions carried out in tax periods commencing prior to 1 January 2015, income pending inclusion in tax periods commencing on or after that date will be included in the tax base in accordance with the tax regime applicable at the time the transactions were carried out, even if the inclusion is made in tax periods commencing after 1 January 2015.

In application of the provisions of this transitional provision, the positive or negative differences between the profits recorded in the profit and loss account for the financial year being declared and the amounts that are fiscally computable for such items, relating to the transactions in instalments or with deferred price, in respect of which the taxpayer has opted for a time imputation criterion for tax purposes different to that which would be applicable by virtue of the accounting rules, must be entered in the boxes [00510] and [00512] "Instalment transactions (DT 1ª LIS)" on page 13 of form 200.