Offsetting of tax loss carryforwards
Negative tax bases that have been settled can be offset with positive income from the following tax periods.
As a result, there is no time limit for the offsetting.
The limits applicable to the compensation of negative tax bases will be the following based on the net amount of the turnover during the 12 months prior to the date on which the tax period begins:
- Turnover of less than €20m: 70%
- Turnover equal to or greater than €20m and less than €60m: 50%
- Turnover equal to or greater than €60m: 25%
For these taxpayers, the offsetting of tax loss carryforwards must not exceed the result of applying these percentages to the gross tax base before applying the capitalisation reserve and this offset, in any event, total tax loss carryforwards of 1 million euros can be offset in one tax period.
This limitation will not be applicable to the amount of income corresponding to debt reduction as a result of reaching an agreement with the taxpayer's creditors.
This limit will not apply in the tax period in which the extinction of the entity occurs, unless it is a consequence of a restructuring operation to which the special tax regime established in Chapter VII of Title VII of the LIS .
If the tax period is less than one year, the negative tax bases that can be offset during the tax period will be the result of multiplying 1 million euros by the duration of the tax period in relation to a full year.
Negative tax bases cannot be offset in the following circumstances:
The majority of the share capital or rights to be included in the results of a company has been acquired by a person or entity, or by a group of people or related companies, after the conclusion of a tax period that the negative tax base corresponds with.
The individuals or entities must have held less than 25% of the shares at the end of the tax period in which the tax loss carryforward was generated.
The acquired company finds itself in one of the following circumstances:
It has not been developing an economic activity of any kind during the 3 months prior to acquisition.
It has carried out an economic activity in the 2 years following a different or additional activity to that which previously took place, which determined a net turnover in these years of more than 50% of the average turnover amount for the previous 2 years. A different or additional activity is deemed one that is assigned a different group to the previous one, according to the National Classification of Economic Activities.
It is a patrimonial entity in the terms established in article 5.2 of the LIS .
The entity has been removed from the entity index for not submitting, for 3 consecutive tax periods, the IS declaration.
The possibility of offsetting negative tax bases with positive income from tax periods that end in subsequent years that the LIS establishes for this purpose is not an autonomous right of the taxpayer, that is, it is not recognized by the taxpayer independently, but rather is It recognizes it to the extent that the taxpayer, as a consequence of compliance with its tax obligations and the application of tax regulations, self-assesses or has its corporate tax debt settled. This is extracted from the very wording of article 26 of LIS when stating that negative tax bases that have been subject to liquidation or self-assessment may be offset, that is, there is no autonomous right. to the compensation of negative tax bases but there is a power, derived from the legal-tax relationship existing between the Tax Administration and the taxpayer and attributed by the Law, to be able to compensate negative tax bases with submission to the requirements demanded by the same. but no provision recognizes an autonomous right to such compensation.