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6.2. Main Differences between Commercial and Tax Accounting

There is a direct relationship between the accounting rules (set out by the General Accounting Plan - Plan General de Contabilidad) and the computation of the tax base.

The existing differences, which are outlined hereafter, are known as adjustments (“ajustes”). Such adjustments can be either temporary (if the difference between accounting and tax rules is limited to the moment where income or expenses are taken into account), in which case the difference will be reversed in another tax year, or permanent (if the difference will never be reversed).

The permanent adjustments may be positive or negative. They will be positive if expenses which are deductible for accounting purposes are not deductible in calculating the taxable amount. They will be negative if the tax rules allow for expenses higher than those accepted by the accounting rules (i.e. exemption of foreign dividends). Likewise, temporary adjustments may be positive or negative, but they will be reversed in later years.

Due to the economic crisis, an exceptional measure has been taken in year 2013. This measure allows a revaluation of tangible assets, immovable property investments and assets acquired under a leasing agreement, located in Spain (or abroad, in case of assets allocated to a permanent establishment of the Spanish company), which are included in the first balance sheet closed by the company after the entry into force of the measure (since the measure entered into force on 28 December 2012, the first balance sheet will be that of 2012 for those companies whose tax year coincides with the calendar year). This measure aims both at adapting the book value to the real value of the assets and to collect the one-off 5% non-deductible tax on the accounting surplus (to be paid on the day the tax return for 2012 is submitted).

Also assets acquired under a leasing agreement can be revaluated, but the revaluation can be reverted if the purchase option is not exercised.

This revaluation is optional and is open also to permanent establishments of foreign company located in Spain (on the assets allocated to the PE).

The revaluation is made by applying a fixed coefficient according to the year of acquisition of the asset. The coefficient ranges from 2.2946 (for assets acquired before 1 January 1984) and 1.0100 (for assets acquired in 2011).

The revaluation must be done between the date of the closing of the balance and the date of its approval. The increase in value must be booked in the accounts as a revaluation reserve (“reserva de revalorización Ley 16/2012, de 27 de diciembre”), and cannot be used until the Tax Administration approves it or otherwise, after three years have passed since the tax return has been submitted. After that, it can be used but only to offset losses or to increase the share capital of the company. After 10 years it can be used freely.