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Practical Manual for Companies 2022.

General considerations

Article 11.1 of the LIS establishes that income and expenses derived from transactions or economic events will be charged to the tax period in which they accrue, in accordance with accounting regulations, regardless of the date of payment or collection, respecting the due correlation between them.

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

This tax criterion coincides with the accounting criterion set out in letter d) of article 38 of the Commercial Code, which establishes that the expenses and income affecting the financial year to which the annual accounts refer will be charged to the financial year, regardless of the date of payment or collection.

Remember:

Article 11.2 of the LIS establishes that the fiscal effectiveness of criteria for the temporary imputation of income and expenses other than the accrual principle, used exceptionally by the taxpayer for the purposes of obtaining 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 , will be subject to approval by the tax authorities, in the manner determined by regulation.

In relation to the accrual principle, article 11.3. 1 of the LIS includes the accounting entry principle according to which expenses that have not been recorded in the profit and loss account or in a reserve account will not be tax deductible if so established by a legal or regulatory standard, with the exception of the provisions of the Tax Law regarding assets that can be freely or acceleratedly amortized.

Income and expenses recorded in the profit and loss account or in a reserve account in a tax period other than that in which their temporary allocation is appropriate, as provided for in sections 1 and 2 of article 11 of the LIS, will be recorded in the corresponding tax period in accordance with the provisions of said sections. However, in the case of expenses recorded in the accounts in a tax period subsequent to the one in which their temporary allocation is due, or income recorded in the accounts in a previous tax period, the temporary allocation of both will be carried out in the tax period in which the accounting allocation was made, provided that this does not result in lower taxation than that which would have been applicable by application of the temporary allocation rules provided for in the previous sections.

Filling in form 200

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

  • If an expense is recorded in the profit and loss account or in a reserve account in a tax period prior to the one in which its temporary allocation is due, the necessary adjustment must be made so that it is not recorded in said period, but in the accrual period.

    Therefore, if that expense has been recorded in the profit and loss account, a correction for increases must be made in box [00361] . However, if the expense has been recorded in a reserve account, the tax base will not have to be increased since its amount is not included in the accounting result. Likewise, in the tax period in which the accrual of said expense occurs, a correction for decrease must be made in box [00362] , regardless of the account in which it was recorded.

  • The income imputed to the profit and loss account or to a reserve account in a tax period prior to the one in which its temporary imputation is appropriate, will be taxed in the tax period corresponding to its accounting imputation, provided that this does not result in lower taxation than that which would have corresponded by application of the general rules for temporary imputation.

    In this case, if the income has been recorded in the profit and loss account, no adjustment will have to be made. However, if said income has been recorded in a reserve account, a correction for increases in box [00361] must be made in the tax period in which it has been recorded.

  • The expenses that are accounted for in the profit and loss account or in a reserve account in a tax period subsequent to that in which their temporary imputation is appropriate , will be accounted for tax purposes in the tax period corresponding to their accounting imputation, provided that this does not result in lower taxation than that which would have corresponded by application of the general rules for temporary imputation.

    In this case, if the expense has been recorded in the profit and loss account, no adjustment will have to be made. However, if said expense has been recorded in a reserve account, a correction for decrease in box [00361] must be made in the tax period in which it has been recorded.

  • revenue that has been recorded in the profit and loss account or in a reserve account in a year subsequent to the one in which it is temporarily recorded will give rise to a correction for decreases in box [00362] only when it has been recorded in the profit and loss account in the year in which it is recorded. However, if such income has been recorded in a reserve account, the tax base will not have to be reduced, since its amount is not included in the accounting result. Likewise, in the tax period of its fiscal accrual, which will be prior to that of its accounting, a correction must be made for increases in box [00361] , regardless of the account in which they were recorded.