9.6.3 Conversion of deferred tax assets into a claim against the tax authorities

According to the provisions of article 130.3 of the LIS , the conversion of deferred tax assets referred to in article 130.1 of the LIS will occur at the time of filing the Corporate Tax return corresponding to the tax period in which the circumstances described in article 130.2 of the LIS occurred.

As established in article 130.1 of the LIS, deferred tax assets corresponding to the provisions referred to in article 11.12 of the LIS may be converted into a claim against the tax authorities for an amount equal to the positive net amount corresponding to the tax period in which they were generated, provided that any of the circumstances set out in article 130.2 of the LIS occur:

That the taxpayer records accounting losses in its annual accounts, audited and approved by the corresponding body.

In this case, the amount of deferred tax assets subject to conversion will be determined by the result of applying to the total thereof the percentage that represents the accounting losses for the year with respect to the sum of capital and reserves.
That the entity is subject to liquidation or judicially declared insolvency.

Deferred tax assets for the right to offset negative tax bases in subsequent years will also become a claim against the Tax Authority, when they are the result of integrating into the tax base the provisions for impairment of credits or other assets derived from possible insolvencies of debtors, as well as the provisions or contributions to social security systems and, where applicable, early retirement, which generated the deferred tax assets referred to in the first paragraph of article 130.1 of the LIS.

The conversion of deferred tax assets into a claimable credit against the Tax Authority, as referred to in article 130.1 of the LIS, will determine whether the taxpayer may choose to request payment from the Tax Authority or to offset said credits against other state-related tax debts that the taxpayer itself generates from the moment of conversion, in accordance with the procedure and within the period established in article 69 of RIS .

On the other hand, deferred tax assets may be exchanged for Public Debt securities, once the period of eighteen years has elapsed, computed from the last day of the tax period in which the accounting record of such assets occurs.