Practical examples

In 2020, entity "Z" generated non-deductible expenses of 10,000 euros for allocations to social welfare systems that have generated deferred tax assets in accordance with article 11.12 of the LIS , to which the right established in article 130 of the LIS is applicable.Subsequently, in 2021, these expenses become tax deductible.

Scenario 1

Assume that the turnover of entity Z in the 12 months before the beginning of the tax period for 2021 is €15 million.

The entity's previous positive tax base is 8,000 euros.

In this case, in 2020 the entity should have included in box [00415] of increases the amount of 10,000 euros corresponding to the expense for allocations to social welfare systems that was not tax deductible in that period.

In 2021, this expense becomes tax deductible.However, the entity must take into account the limit established in article 11.12 of the LIS, which for entities whose turnover in the 12 months prior to the start of the tax period is less than 20 million euros, is 70 per cent.Therefore, the entity shall enter in the decreases box [00211] the amount of 10,000 euros corresponding to the expense for allocations to social welfare systems that is deductible in this financial year.Likewise, the entity must enter in box [00416] for increases the amount of 4,400 (10,000 - 5,600) euros which, by application of the limit established for the financial year 2021 in article 11.12 of the LIS, are not deductible in that year.

Scenario 2

Assume that the turnover of entity Z in the 12 months before the beginning of the tax period for 2021 is 45 million euros.

The entity's previous positive tax base is 8,000 euros.

In this case, in 2020 the entity should have included in box [00415] of increases the amount of 10,000 euros corresponding to the expense for allocations to social welfare systems that was not tax deductible in that period.

In 2021, this expense becomes tax deductible.However, the entity must take into account the limit established in article 11.12 of the LIS, which for entities whose turnover in the 12 months prior to the start of the tax period is equal to or greater than 20 million euros, but less than 60 million euros, is 50 percent (DA 15 of the LIS).Therefore, the entity shall enter in the decreases box [00211] the amount of 10,000 euros corresponding to the expense for allocations to social welfare systems that is deductible in this financial year.Likewise, the entity must enter in box [00416] for increases the amount of 6,000 (10,000 - 4,000) euros which, by application of the limit established for the financial year 2021 in article 11.12 and in the fifteenth additional provision of the LIS, are not deductible in that financial year.