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Practical Manual of Companies 2022.

Levelling reserve

Regulation: Article 105 LIS

1. Scope

This tax incentive may be applied by entities that meet the requirements of article 101 of the LIS to be considered small companies in the tax period, and apply the general tax rate provided for in the first paragraph of article 29.1 of said Law.

2. Amount and limits

Small companies that apply this tax incentive may reduce their positive tax base up to 10 percent of its amount.

However, said reduction may not exceed the amount of 1 million euros.

If the tax period has a duration of less than one year, the amount of the reduction may not exceed the result of multiplying 1 million euros by the proportion between the duration of the tax period with respect to the anus.

This reduction of the positive tax base will be taken into account for the purposes of determining the installment payments referred to in section 3 of article 40 of the LIS.

The amounts referred to in the previous paragraph, will be added to the tax base of the tax periods that conclude in the immediate and successive 5 years at the end of the tax period in which said reduction is made, provided that the taxpayer has a negative tax base, and up to the amount thereof. The remaining amount will be added to the tax base of the tax period corresponding to the date of conclusion of the aforementioned period.

3. Reserve provision

Small companies that apply this tax incentive must provide a reserve for the amount of the reduction included in the previous section, which will be unavailable until the tax period in which the addition occurs to the entity's tax base of the amounts referred to in the previous section.

The reserve must be allocated with a charge to the positive results of the year in which the reduction in the tax base is made. If this reserve cannot be allocated, the reduction will be conditional on it being allocated against the first positive results of subsequent years for which it is possible to make this allocation.

It will not be understood that the aforementioned reserve has been drawn down in the following cases:

  • When the partner or shareholder exercises his right to separate from the entity.

  • When the reserve is eliminated , totally or partially, as a result of operations to which the special tax regime for mergers, divisions, contributions of assets and exchange of securities established in the Chapter VII of Title VII of the LIS.

  • When the entity must apply the aforementioned reserve by virtue of a legal obligation.

The amounts intended for the provision of the reserve provided for in this article may not be applied, simultaneously, to the fulfillment of the capitalization reserve established in article 25 of the LIS or the Reserve for Investments in the Canary Islands provided for in article 27 of the Law. 19/1994, of July 6, modifying the Economic and Fiscal Regime of the Canary Islands.

Date on which the reservation must be made

Article 273 of the consolidated text of the Capital Companies Law, approved by Royal Legislative Decree 1/2010, of July 2, establishes in its section 1 that the general meeting will resolve on the application of the result of the year in accordance with the approved balance. Consequently, the equalization reserve must be allocated at the time determined by the commercial standard for the application of the result of the year.


Company "A" whose financial year runs from January 1 to December 31, for the purposes of reducing the tax base for the 2022 tax period, when the general meeting resolves on the application of the result of the 2022 financial year, may allocate the leveling reserve .

4. Non-compliance

If the requirements demanded by the regulations to be able to apply this tax incentive are not met, the full amount corresponding to the amounts that have been subject to reduction must be integrated into the full quota of the tax period in which the non-compliance occurs, increased by 5 percent , in addition to late payment interest.

The payment of the full increased amount and late payment interest will be made together with the self-assessment corresponding to the tax period in which the requirements were not met. This amount must be collected in box [01038] "Increase due to non-compliance with leveling reserve (art. 105.6 LIS)" on page 14 of form 200, the breakdown of which will be made in the table « Leveling reserve » on page 20 bis of said model.