On 2 December, the Spanish Government approved, as a matter of urgency, the Royal Decree-Law 3/2016 containing certain tax measures, among others, in order to meet Spain's commitments to the European Commission by incurring a deficit of no more than 3.1 percent of GDP.
We set out below the tax measures that we consider of special relevance and which mainly affect Corporate Income Tax:
New measures in the field of Corporate Income Tax
Tax measures affecting Corporate Income Tax aim, on the one hand, to widen tax bases (reducing the amount of tax deductible losses) and, on the other hand, to accelerate tax collection (through the obligation to incorporate the reversal of impairments of stakes in companies and by extending the time limits in which companies with a turnover higher than EUR 20 million can benefit from certain tax credits available to them).
With effect for tax periods beginning as from 1 January 2016, the main measures approved are as follows:
New mechanism for reversing those impairments of stakes that were tax deductible in tax periods prior to 2013.
The reversal of impairment losses of stakes that have been tax deductible in tax periods beginning prior to 1 January 2013, shall be incorporated at least in equal parts into the taxable income for each of the first five tax periods beginning on or after 1 January 2016.
New limitations on offsetting accumulated tax losses:
The following limitations for offsetting pending carried forward tax losses are established, which again depend on the turnover achieved by the taxpayer during the previous 12 months:
- if the turnover in the prior fiscal year is less than EUR 20 million, the applicable limit is 60 per cent of the taxable income of the year for tax periods started in 2016 and 70 per cent for those tax periods started as from 2017;
- if the turnover in the prior fiscal year is equal to or higher than EUR 20 million but less than EUR 60 million, the applicable limit is 50 per cent of the taxable income of the year; and
- if the turnover in the prior fiscal year is equal to or higher than EUR 60 million, the applicable limit is 25 per cent of the taxable income of the year.
New limitations on the application of generated or carried forward tax credits to avoid international or internal double taxation, applicable to large companies:
For those taxpayers whose turnover is equal to or higher than EUR 20 million, the amount of those tax credits to avoid internal or international double taxations, generated in the relevant fiscal year or carried forward from previous fiscal years, cannot jointly exceed 50 per cent of the tax payable (before the deduction of tax credits).
The excess can be deducted in the following fiscal years, together with the tax credits generated in the relevant fiscal year, subject to the abovementioned threshold although without any timing limitation.
With effect for tax periods beginning as from 1 January 2017, losses arising from the transfer of stakes in entities shall not be deemed deductible for Corporate Income Tax purposes provided that said stakes have granted the right to obtain exempt income, both for dividends or in capital gains made in the transfer of shares. Likewise, losses arising from the transfer of stakes in entities resident in tax havens or subject to a tax on profits with a nominal rate lower than 10 per cent shall neither be deemed deductible for Corporate Income Tax purposes.
Please note that the abovementioned measures of the Spanish Government are addressed, on the one hand, to advance the payment of taxes by the large companies incorporated in Spain and, on the other hand, to eliminate the utilisation of losses, which was a measure originally created as a tax incentive to foster the internationalization of the Spanish companies.
Other tax measures
Royal Decree-Law 3/2016 contains other tax measures, among others, the following which must be highlighted:
- the update of the cadastral value for fiscal year 2017 of the real estate assets located in certain Municipalities, which may impact the Real Estate Tax debt (IBI) as well as other taxes such as the Local Tax on the Increase of Value of Urban Plots (IIVTNU); and
- stricter requirements for the payment of tax debts to be deferred or paid in instalments as from 1 January 2017, as additional situations in which the tax debt cannot be subject to payment deferrals or to payments in instalments have been created, such as (i) debts resulting from non-appealable judgements when the payment of those debts were previously suspended during the administrative or judicial appeal process; or (ii) those debts to be paid by a taxpayer which is bound to make advanced payments (pagos fraccionados) under the Corporate Income Tax.
