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13.2. Thin-capitalization and other Restrictions to Interest Deduction

Effective 1 January 2012, Spain has implemented earnings stripping rules. A limitation on the deduction of financial expenses applies to all companies regardless of the identity and residence of the lender. Under this rule, companies can only deduct their net financial expenses up to 30% of their EBITDA (with certain adjustments), although net financial expenses up to EUR 1 million are always deductible. Net financial expenses that have not been deducted in a given year because of the 30% limit may be carried forward indefinitely for deduction in future years, subject to the 30% limitation.

In the case of consolidated tax groups, the limitation is applicable to the group.

In the case of tax years that last less than 12 months, the EUR 1 million must be calculated on a pro-rata basis.

The 30% EBITDA limitation does not apply to financial and insurance entities.