New regulations for 2014

Law 17/2014, dated 30 September, through which urgent measures are adopted on the subject of refinancing and restructuring of business debt.

Act 17/2014 of 30 September, which was published in the Official State Gazette of 1 October 2014, adopts urgent measures pertaining to the refinancing and restructuring of business debt, approving the measures already contained in Royal Decree-Law 4/2014, dated 7 March, through which urgent measures are adopted on the subject of refinancing and restructuring of business debt, with effect for the tax periods commencing from 1 January 2014.

These measures modify the rewritten text of the Corporation Tax Act approved by Legislative Royal Decree 4/2004, dated 5 March, establishing the absence of taxation in cases of debt capitalisation, unless said capitalisation had been the object of a derivative acquisition by the creditor, for a value other than the nominal value. Thus this law expressly states a criterion that had already been accepted by administrative doctrine for specific cases of debt capitalisation among linked organisations.

Similarly, with the aim of establishing an adequate approach to the current economic situation, and preventing taxation from becoming an obstacle to refinancing operations in general, the Corporation Tax Act is modified with regard to the tax treatment of income deriving from a reduction of debt and extension of time derived from applying Bankruptcy Law. Thus, taking into account that neither operation increases the tax capacity of the organisations, a system has been established for imputing income generated in the taxable base according to the financial expenses that are registered later.