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Practical Handbook for Companies 2021

Impairment losses on securities representing shares in capital or equity

1.Article 13.2 (b) of the LIS

This article establishes that will not be deductible losses due to impairment of securities representing the shareholding in the capital or equity of entities when in the tax period in which the impairment is recorded, any of the following circumstances arise:

  • The requirement established in article 21.1 a) of the LIS is not met.This requirement is that the direct or indirect shareholding in the capital or own funds of the institution must be at least 5 per cent.With effect for tax periods beginning on or after 1 January 2021, the alternative requirement that the acquisition value of the holding be greater than 20 million euros is eliminated, although the fortieth transitional provision of the LIS adds a transitional regime to be applied for a period of 5 years to holdings acquired in tax periods beginning prior to 1 January 2021, which have an acquisition value greater than 20 million euros, without reaching the 5 percent percentage established in article 21.1 a) of the LIS.In addition, it is required that participation must be held continuously for at least 1 year, and

  • In the case of holdings in the capital or equity of entities not resident in Spanish territory, in that tax period , the requirement established in article 21.1 b) of the LIS must also be met, i.e. the entity must have been subject to and not exempt from a foreign tax of an identical or analogous nature to this tax at a nominal rate of at least 10 per cent.

Filling in form 200

In application of the provisions of article 13.2 b) of the LIS, the taxpayer must make the following adjustments in the boxes [00325] and [00326] "Adjustments for losses due to impairment of securities representing participation in capital or equity (art. 13.2 b) LIS)" on page 12 of form 200:

  • In the box [00325] of increases, the taxpayer must enter the amount of the losses due to impairment of the securities representing the participation in the capital or in the equity of entities accounted for in the tax period being declared, which are not deductible by application of article 13.2 b) of the LIS.

  • However, in accordance with the provisions of article 20 of the LIS, these impairment losses will be deductible in the tax period in which the holding is transferred or derecognised, provided that the aforementioned requirements are met during the year prior to the transfer or derecognition of the holding.

    In these cases, the taxpayer in the tax period following the accounting period of the aforementioned impairment losses that gave rise to a positive adjustment to the accounting result (box [00325]) because they are not tax deductible, should include in the box [00326] of decreases, the amount corresponding to said impairment as a consequence of its reversal.

If does not meet one or none of the requirements of art. 21.1.a) LIS:

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

But does meet the requirement of art. 21.1.b) LIS, i.e. the investee is taxed at a nominal rate ≥ 10%.

Then article 13.2 LIS will apply.

Therefore, they will not be deductible, although will be deductible when the shareholding is transferred or is deregistered (art. 20 LIS).

2.Case of Article 15 k) of the LIS

This article establishes that will not be deductible losses due to impairment of securities representing the shareholding in the capital or equity of entities when, in the tax period in which the impairment is recorded, any of the following circumstances apply:

  • the requirements set out in Article 21 of the LIS are met, or

  • In the case of a shareholding in the capital or equity of entities not resident in Spanish territory, in that tax period the requirement established in article 21.1 b) of the LIS is not met.

Filling in form 200

In application of the provisions of this provision, the taxpayer must include in the box [01807] "Impairment losses on securities representing holdings in the capital or equity (art. 15 k) LIS" on page 12 of form 200, the amount of the impairment losses on securities representing holdings in the capital or equity of entities accounted for in the tax period covered by the return, which are not deductible by application of article 15 k) of the LIS.

Application of Article 15 k) LIS

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

  • Stake ≥ 5% or V. Adq.> 20M€ (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.> 20M€ (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.
They are therefore not deductible under any circumstances.