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Practical manual for Income Tax 2024. Volume 1

General tax imputation criterion: accrual principle

Regulations: Arts.14.1b) Law IRPF and 7 Regulation IRPF ; 11.1 and 3.1 LIS

The Personal Income Tax Law establishes as a basic guiding principle in this matter the reference to the regulations governing Corporate Tax, without prejudice to certain specialities contained in the tax Regulations themselves.

According to article 11.1 of the IS , the general criterion for tax imputation is constituted by the accrual principle, according to which income and expenses derived from transactions or economic events will be imputed to the tax period in which their accrual occurs, in accordance with accounting regulations, regardless of the date of payment or collection, respecting the due correlation between them.

Particular case: digital kit grant

The digital kit subsidy, to the extent that it is intended to finance expenses or investments of holders of economic activities, is classified as income from economic activities, in accordance with the provisions of article 27.1 of Personal Tax Law.

Regarding its temporary imputation, article 14.1.b) of the Income Tax Law refers to the Corporate Income Tax regulations and the specific rules contained in the Personal Income Tax Regulations . In the absence of specific regulations, the provisions of commercial accounting regulations apply. Specifically, Valuation Standard 18 of the General Accounting Plan, according to which, once the subsidy has been recognized as non-refundable (that is, when there is an individual agreement for its granting, the conditions established for its granting have been met and there are no reasonable doubts about its receipt), the imputation criterion is established according to its purpose:

  1. If it is granted to guarantee minimum profitability or to compensate for losses incurred in the activity, it will be treated as a current subsidy, and will therefore be fully computed as additional income for the period in which it is accrued. That is, when the granting of the subsidy is firmly recognised and quantified, regardless of when it is received.

  2. If it is intended to promote investments in fixed assets or multi-year projection expenses, it will be treated as a capital subsidy, so it will be charged to the same extent as the investments made against it are amortized.