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Practical Manual for Companies 2023.

Practical examples

Example 1:

Company "M" is a small entity that pays taxes under the special regime applicable to such entities provided for in articles 101 to 105 of the LIS , whose tax period coincides with the calendar year.

In the 2022 financial year, said company was required to set aside a reserve of 100,000 euros and only set aside the amount of 50,000 euros in said financial year.

In the Corporate Income Tax return for the year 2022 , company "M" should have completed the "Reserve allocation" section of the "Leveling reserve" table on page 20 bis of form 200 as follows:

Exercise
of generation
Reserve amount to be allocated Amount of allocated reserve Reservation amount
pending allocation
Reservation ready
2022 100,000 50,000 50,000 0

Subsequently, in fiscal year 2023, company "M" provides an additional reserve of 25,000 euros corresponding to the amount of the reserve that it was obliged to provide in fiscal year 2022.

In the Corporate Income Tax return for the year 2023 , company "M" must complete the "Reserve allocation" section of the "Leveling reserve" table on page 20 bis of form 200 as follows:

Exercise
of generation
Reserve amount to be allocated Amount of allocated reserve Reservation amount
pending allocation
Reservation ready
2022 100,000 75,000 25,000 0

As can be seen in this example, the amount of 100,000 euros to be entered in the column "Reserve amount to be allocated" does not vary in the different corporate tax returns as long as the obligation to allocate the equalisation reserve persists.

Example 2:

Company "A" is a small entity that pays taxes under the special regime applicable to such entities provided for in articles 101 to 105 of the LIS, whose tax period coincides with the calendar year.

Exercise 2022:

Equity of company "A" as of 01/01/2022 Equity of company "A" as of 31/12/2022
Social capital
300,000
Social capital
300,000
Legal reserve
30,000
Legal reserve
30,000
Statutory reservations
10,000
Statutory reservations
10,000
Voluntary reserves
300
Voluntary reserves
30,300
Result of the 2021 financial year
50,000
---
---

Other data:

  • 2022 result of the profit and loss account of IS : 250,000
  • There is no difference between accounting results and tax results
  • Withholdings: 5,000
  • Tax rate: 25%

Calculation of capitalization and equalization reserves for the year 2022

  1. First, company "A" calculates the capitalization reserve in accordance with article 25 of the LIS:

    Total: 300.300 Total: 330.300
    FP for the purposes of article 25 as of 01/01/2022 FP for the purposes of article 25 as of 31/12/2022
    Social capital
    300,000
    Social capital
    300,000
    Voluntary reserves
    300
    Voluntary reserves
    30,300

    According to the above data, the increase in equity (Δ FP) is 30,000

    Therefore, the capitalisation reserve for the year, as established in article 25 of the LIS, will be 10% of the increase in the company's equity, with a limit of 10% of the positive tax base of the tax period prior to this reduction, the integration referred to in section 12 of article 11 of this Law and the compensation of negative tax bases.

    • Capitalization reserve = 10% reduction of Δ FP = 3,000
    • Limit 10% BI prior to capitalization reserve = 10% 250,000 = 25,000
    • Pending capitalization reserve to be applied = 0

    The requirements for maintaining the increase in equity must be met. A capitalisation reserve of 3,000 must also be provided.

  2. As for the levelling reserve for the year 2022, as established in article 105 of the LIS, it may be reduced by up to 10% of the positive tax base, with a limit of 1 million euros:

    • Leveling reserve = 10% of positive BI = 10% 247,000 = 24,700
    • Limit = 1,000,000

    The amount of 24,700 will be added to the tax base of the tax periods ending in the 5 years immediately following the end of the 2022 tax period, provided that company A 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 completion of the aforementioned period.

    A leveling reserve of 24,700 must be provided in 2022.

    The settlement of the Corporate Tax for the year 2022 is as follows:

    IS settlement 2022
    Accounting result before taxes 2022 250,000
    Differences
    0
    BI prior to the reduction of art. 25 and the compensation of negative BI 250,000
    Capitalization reserve (limit 10% x 250,000 = 25,000)
    -3.000
    Compensation of negative tax bases from previous periods 0
    Taxable base 247,000
    Leveling Pool (Limit 1,000,000)
    -24.700
    BI after leveling reservation 222.300
    Tax rate 25%
    Total tax liability 55.575
    Tax deductions and bonuses 0
    Net share 55.575
    Withholdings and prepayments -5.000
    Due tax 50.575

Exercise 2023:

Equity of company "A" as of 01/01/2023 Equity of company "A" as of 31/12/2023
Social capital
300,000
Social capital
300,000
Legal reserve
30,000
Legal reserve
30,000
Statutory reservations
10,000
Statutory reservations
20,000
Voluntary reserves
30,300
Capitalisation reserve
3,000
Result of the 2022 financial year
250,000
Levelling reserve
24,700
---
---
Voluntary reserves
60,300

Other data:

  • IS profit and loss account result for 2023: -20,000
  • There is no difference between accounting results and tax results
  • Withholdings: 5,000
  • Tax rate: 25%

Calculation of capitalization and equalization reserves for fiscal year 2023

  1. First, company "A" calculates the capitalization reserve in accordance with article 25 of the LIS:

    Total: 330.300 Total: 363,300
    FP for the purposes of article 25 as of 01/01/2023 FP for the purposes of article 25 as of 31/12/2023
    Social capital
    300,000
    Social capital
    300,000
    Voluntary reserves
    30,300
    Voluntary reserves
    60,300
    ---
    ---
    Capitalisation reserve
    3,000

    According to the above data, the increase in equity (Δ FP) is 33,000.

    Therefore, the capitalisation reserve for the financial year, as established in article 25 of the LIS, will be 10% of the increase in the company's equity, with a limit of 10% of the positive tax base of the tax period prior to this reduction, the integration referred to in section 12 of article 11 of this Law and the compensation of negative tax bases.

    • Capitalization reserve = 10% reduction of Δ FP = 3,300
    • Limit 10% BI prior to capitalization reserve = 0
    • Capitalization reserve pending application during the next two years = 3,300
  2. Regarding the leveling reserve for the 2023 financial year, given that the taxable base for the period is -20,000, the amounts reduced by the leveling reserve for 2022 must be added up to said amount.

    • 2022 Leveling Reserve Addition = 20,000
    • Leveling reserve pending addition = 24,700 - 20,000 = 4,700

    The settlement of the Corporate Tax for the year 2023 is as follows

    IS settlement 2023
    Accounting result before taxes 2023 -20,000
    Differences
    0
    BI prior to the reduction of art. 25 and the compensation of negative BI -20,000
    Capitalization reserve (limit 0)
    0
    Compensation of negative tax bases from previous periods 0
    Taxable base -20,000
    Leveling reserve (negative BI limit: -20,000)
    20,000
    BI after leveling reservation 0
    Tax rate 25%
    Total tax liability 0
    Tax deductions and bonuses 0
    Net share 0
    Withholdings and prepayments -5.000
    Due tax -5.000

Completion of the capitalization and equalization reserve tables in form 200 for the years 2022 and 2023

• 2022 Corporate Tax Return
Levelling reserve (page 20 bis of model 200)
Reduction in tax base
Exercise
generation
BI minority amount
in the period / pending
added to the beginning of the period
Amount added to base
taxable in the period
BI amount integrated in declaration
due to non-compliance with requirements
Pending amount of
to be added in future periods
2022 24,700 - - 24,700
Reserve allocation
Exercise
generation
Reservation amount
to be allocated
Reservation amount
allocated
Reservation amount
pending allocation
Reservation ready
2022 24,700 24,700 0 0
Capitalization reserve (page 20 bis of form 200)
Exercise
generation
Right to reduce BI generated
in the period / pending
apply at the beginning of the period
BI reduction applied Pending BI reduction of
to be applied in future periods
2022 3,000 3,000 0
Capitalization reserve provided in the year 0
• 2023 Corporate Tax Return
Levelling reserve (page 20 bis of model 200)
Reduction in tax base
Exercise
generation
BI minority amount
in the period / pending
added to the beginning of the period
Amount added to base
taxable in the period
BI amount integrated in declaration
due to non-compliance with requirements
Pending amount of
to be added in future periods
2022 24,700 20,000 0 4.700
Reserve allocation
Exercise
generation
Reservation amount
to be allocated
Reservation amount
allocated
Reservation amount
pending allocation
Reservation ready
2022 0 0 0 20,000
Capitalization reserve (page 20 bis of form 200)
Exercise
generation
Right to reduce BI generated
in the period / pending
apply at the beginning of the period
BI reduction applied Pending BI reduction of
to be applied in future periods
2023 3.300 0
3.300
Capitalization reserve provided in the year 3,000