The ruling that has been appealed to the Supreme Court confirmed the Administration’s position on the non-exemption of income under article 121.1 of the Corporate Tax Act. It relied on the doctrine established in the Supreme Court ruling of November 29th, 2016, in appeal number 3973/2015. On the issue of the deduction of the expense corresponding to allocations to PAC funds, the judgment also relied on the same to reject it and added that the Supreme Court does not contradict this conclusion regarding the excess contribution to these funds that constitutes a non-tax deductible application of results.
In addition, the ruling denies the deduction for donations regulated in Law 49/2002 for the excess contribution to these funds because they are considerations for services rendered and not donations or gifts that can be included in this legal assumption. The ruling of the Supreme Court of March 30, 2021 determines that the expenses recorded are not deductible when they constitute donations and gifts. Consequently, there is a need for a new ruling that gives a clear answer to the conflict and specifies the legal classification of the contributions of the General Society of Authors (SGAE) to the funds for the promotion of complementary activities, coming from the income from royalties, and whether they can be deductible.
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