Practical examples

Example 1

How to apply net financial expenses from previous years

Entity "A" presents the following data in the tax period:

Operating Profit (OP): €100 million
Financial expenses (GF):
- Year 0: €80 million
- Year 1: €20 million
- Year 2: €40 million

According to article 16.1 of the LIS , the entity can deduct net financial expenses up to a limit of 30 percent of the operating profit for the year; In any case, the net financial expenses of the tax period amounting to 1 million euros are deductible.

Maximum limit:

• 30% Operating profit = 30% x 100 = €30 million
• €1 million

Year 0:

BO limit = €30 million (30% of 100)
GF deductibles = €30 million
GF pending deduction = €50 million

Year 1:

BO limit = €30 million (30% of 100)
Deductible GF = €20 million from the tax period + €10 million from the previous tax period (Year 0)
Pending deductions = €40 million from the previous tax period (Year 0)

Year 2:

BO limit = €30 million (30% of 100)
Deductible GF = €30 million of the tax period
Pending deductions = €40 million from Year 0 and €10 million from this tax period (Year 2).

Completing Form 200 (Page 20)
Limit art. 16.1 and 16.2 LIS	Box number	Year 0	Year 1	Year 2
h) Net financial expenses of the tax period (= [fg])	[01248]	80	20	40
i) Limit on the deduction of net financial expenses (= 30%* [i1-i2-i3-i4+i5-i6])	[01249]	30	30	30
j) Addition for operating profit limit not applied in the previous five years	[01255]	-	-	-
k) Total limit on the deduction of net financial expenses, in any case, 1 million euros if the limit on the deduction of Net financial expenses plus the addition of the limit stated in letter j) is less than 1 million	[02639]	30	30	30
l1) Net financial expenses of the deductible tax period ([h=l1+l2], ≥ 0)	[01256]	30	20	30
l2) Non-deductible net financial expenses of the tax period (=[h - l1], ≥ 0)	[01257]	50	0	10
m) Financial expenses pending deduction in previous tax periods affected by art. 16.5 and/or 83 LIS deductible after applying the 2 limits (</=[d]; >/=0)	[01258]	0	0	0
n) Net financial expenses pending deduction from previous tax periods not affected by Article 16.5 and/or 83 LIS applied	[01259]	0	10 ⁽¹⁾	0
Total non-deductible financial expenses of the tax period (= [c2+l2])	[01260]	50	0	10

Example 2

How to add unused operating profit to future years

Entity "B" presents the following data in the tax period:

Operating Profit (OP): €100 million
Financial expenses (GF):
- Year 0: €20 million
- Year 1: €10 million
- Year 2: €60 million

Maximum limit:

• 30% Operating profit = 30% x 100 = €30 million
• €1 million

Year 0:

BO limit = €30 million (30% of 100)
Deductible GF = €20 million of the tax period
Limit of unconsumed BO in year 0 = €10 million

Year 1:

BO limit = €30 million (30% of 100)
Deductible GF = €10 million of the tax period
Limit of unconsumed BO in year 1 = €20 million
Limit of BO not consumed in previous periods (Year 0) = €10 million

Year 2:

BO limit = €30 million (30% of 100)
Deductible GF = €60 million (€30 million from application of the tax period limit + €30 million from the excess BO from previous periods)
GF pending deduction = 0

Completing Form 200 (Page 20)
Limit art. 16.1 and 16.2 LIS	Box number	Year 0	Year 1	Year 2
h) Net financial expenses of the tax period (= [fg])	[01248]	20	10	60
i) Limit on the deduction of net financial expenses (= 30%* [i1-i2-i3-i4+i5-i6])	[01249]	30	30	30
j) Addition for operating profit limit not applied in the previous five years	[01255]	- ⁽²⁾	- ⁽³⁾	30 (10+20)
k) Total limit on the deduction of net financial expenses, in any case, 1 million euros if the limit on the deduction of Net financial expenses plus the addition of the limit stated in letter j) is less than 1 million	[02639]	30	30	60
l1) Net financial expenses of the deductible tax period ([h= l1+l2], ≥ 0)	[01256]	20	10	60
l2) Non-deductible net financial expenses of the tax period (=[h - l1], ≥ 0)	[01257]	0	0	0
m) Financial expenses pending deduction in previous tax periods affected by art. 16.4 and/or 83 LIS deductible after applying the 2 limits (</= [d]; </=0)	[01258]	0	0	0
n) Net financial expenses pending deduction from previous tax periods not affected by Article 16.5 and/or 83 LIS applied	[01259]	0	0	0
Total non-deductible financial expenses of the tax period (= [c2+l2])	[01260]	0	0	0

Example 3

How to apply the €1 million limit:

Entity “C” presents the following data in the tax period:

Annual Operating Profit (OP) for each tax period: 2 million €
Financial expenses (GF):
- Year 0: 0.8 million €
- Year 1: €1.1 million
- Year 2: 0.8 million €

Maximum limit:

• 30% Operating profit = 30% x 2 = 0.6 million €
• €1 million

Year 0:

GF deductibles = €0.8 million for being less than €1 million

Year 1:

GF deductibles = 1 million €
GF pending deduction = €0.1 million

Year 2:

Deductible GF = €0.8 million from the tax period + €0.1 million from the previous tax period (Year 1)
GF pending deduction = 0

Completing Form 200 (Page 20)
Limit art. 16.1 and 16.2 LIS	Box number	Year 0	Year 1	Year 2
h) Net financial expenses of the tax period (= [fg])	[01248]	0.8	1.1	0.8
i) Limit on the deduction of net financial expenses (= 30%* [i1-i2-i3-i4+i5-i6])	[01249]	0.6	0.6	0.6
j) Addition for operating profit limit not applied in the previous five years	[01255]	-	-	-
k) Total limit on the deduction of net financial expenses, in any case, 1 million euros if the limit on the deduction of Net financial expenses plus the addition of the limit stated in letter j) is less than 1 million	[02639]	1	1	1
l1) Net financial expenses of the deductible tax period ([h= l1+l2], ≥ 0)	[01256]	0.8	1	0.8
l2) Non-deductible net financial expenses of the tax period (=[h - l1≥ 0)	[01257]	0	0.1	0
m) Financial expenses pending deduction in previous tax periods affected by art. 16.5 and/or 83 LIS deductible after applying the 2 limits (</=[d]; >/=0)	[01258]	0	0	0
n) Net financial expenses pending deduction from previous tax periods not affected by Article 16.4 and/or 83 LIS applied	[01259]	0	0	0.1 ⁽⁴⁾
Total non-deductible financial expenses of the tax period (= [c2+l2])	[01260]	0	0.1	0

Notes on the examples:

⁽¹⁾ You will need to fill out the section “Limitation on the deductibility of financial expenses.” Financial expenses pending deduction” on page 20 of form 200. ^{(return letter n) Example 1 / Year 1)}

⁽²⁾ Since the 30% operating profit limit is higher than the amount of net financial expenses for the tax period, the section "Pending addition due to unapplied operating profit limit" on page 20 of Form 200 must be completed. ^{(return letter j) Example 2 / Year 0)}

⁽³⁾ The addition is not applicable due to the operating profit limit because in this tax period the net financial expenses do not exceed the limit for the deduction of net financial expenses. Likewise, the section "Pending addition due to unapplied operating profit limit" must be completed. ^{(return letter j) Example 2 / Year 1)}

⁽⁴⁾ You will need to fill out the section “Limitation on the deductibility of financial expenses.” Financial expenses pending deduction” on page 20 of form 200. ^{(return letter n) Example 3 / Year 2)}