B. Allocations to the reserve

Regulation:  DA 70. Four.2 Law 31/2022

The reduction will be applied to the provisions made to the investment reserve in each tax period up to the limit of 90 percent of the portion of profit obtained in the same period that is not subject to distribution, insofar as it comes from establishments located in the Balearic Islands.

The application of the reduction may not determine that the tax base is negative.

For these purposes, profits from establishments in the Balearic Islands will be considered those derived from economic activities, including those from the transfer of assets related to them.

Undistributed profits will be considered used to feed reserves, excluding those of a legal nature.

Undistributed profit will not be considered as profit derived from the transfer of assets whose acquisition would have determined the materialization of the investment reserve regulated in this section, nor as profit derived from securities representing participation in the capital or equity of other entities, as well as the transfer of equity to third parties.

Allocations to reserves will be considered decreased by the amount that would have been eventually deducted from equity, either in the year to which the reduction in the tax base refers or in the year in which the agreement to make the aforementioned allocations was adopted.