Limitation of the deductibility of financial expenses

Article 65.One of Law 11/2020, of December 30, on the General State Budget for the year 2021, with effect for tax periods beginning on or after January 1, 2021 that have not concluded upon the entry into force of this Law (01-01-2021) and indefinite validity, modifies the regulation in article 16.1 of the LIS on the limitation on the deductibility of financial expenses, establishing that for the determination of operating profit, the addition of financial income from participations in equity instruments that correspond to dividends will not be taken into account, when the acquisition value of said participations is greater than 20 million euros , without reaching the percentage of 5 percent referred to in articles 21.1 a) and 32.1 a) of the LIS.

On the other hand, due to the incorporation into the LIS of article 15 bis (with the consequent repeal of article 15 j) of the LIS ) carried out by Law 5/2022, of March 9, which modifies Law 27/2014, of November 27, on Corporate Tax, and the consolidated text of the Non-Resident Income Tax Law, approved by Royal Legislative Decree 5/2004, of March 5, in relation to hybrid asymmetries, with the aim of transposing Council Directive ( EU ) 2016/1164, of July 12 of 2016, in the wording given by Council Directive (EU) 2017/952, of May 29, 2017, regarding hybrid asymmetries that take place between Spain and other Member States and between Spain and third countries or territories , article 16.1 of the LIS is modified in said Law, to establish that the referral made to the expenses referred to in the repealed article 15 j) of the LIS, must be made with effect for tax periods that begin on or after January 1, 2020 and that have not ended on March 11, 2022, to non-deductible expenses of article 15 bis of the LIS.