Law 13/2023, which amends the General Tax Law and other tax regulations in
compliance with EU Directive 2021/514, establishes in its Final Provision 5th a new
wording of the limitation rule for the deductibility of financial expenses in Article 16 of
the Corporate Income Tax Law (LIS).
This modification is carried out to align Spanish regulations with Article 4 of EU
Directive 2016/1164 of the Council, dated July 12, 2016. Spain benefited from an
exception provided for in Article 11, paragraph 6, of this Directive, which allowed
Member States with specific national regulations to prevent BEPS risks to apply
these regulations until January 1, 2024, or until the first budgetary year following the
publication of the OECD agreement on minimum standards related to BEPS Action
4, whichever came first.
Spanish regulations on interest limitation, established in Article 20 of the
consolidated text of the Corporate Income Tax Law through Royal Decree-Law
12/2012, of March 30, were considered equally effective as the Directive by the
European Commission in a letter of formal notice dated February 8, 2018. Despite
this, and in compliance with Article 11.6 of the Directive, it was necessary to adapt
Spanish regulations to Article 4 of the Directive before January 1, 2024. To achieve
this, Law 13/2023 introduces two significant changes to the previous wording of the
- Firstly, a rule has been established that links the amount of operating profit
used to calculate the limit (30%) for the deductibility of net financial expenses
to the taxable base of the Corporate Income Tax. This is reflected in the new
wording of Article 16 of the Corporate Income Tax Law (LIS), which adds a
final clause to the old text (paragraph 1, paragraph 3) stating: “Under no
circumstances shall income, expenses, or income that has not been included
in the taxable base of this Tax be part of operating profit” This modification
aligns with what is established in Article 4, paragraph 2, of the Directive,which states that “EBITDA shall be calculated by re-incorporating into the income subject to corporate income tax in the Member State of the taxpayer,
the amounts adjusted for tax purposes of excess borrowing costs, as well as
the amounts adjusted for tax purposes for depreciation and amortization. Tax-
exempt income shall be excluded from the taxpayer EBITDA”.
- Secondly, the subjective exclusion rule that affected entities equivalent to
credit institutions and insurance companies (letter a) has been removed from
paragraph 6 of Article 16 of the Corporate Income Tax Law (LIS). Specifically,
the following paragraph has been eliminated: “The same treatment was also
given to mortgage securitization funds, regulated by Law 19/1992, of July 7,
on the Regime of Companies and Real Estate Investment Funds and
Mortgage Securitization Funds, and to asset securitization funds referred to in
Additional Provision 5.2 of Law 3/1994, of April 14, by which Spanish
legislation is adapted in matters of credit to the Second Banking Coordination
Directive and other modifications related to the financial system”.
Lastly, although the Eighth Final Provision of Law 13/2023 establishes that it will
enter into force on the day following its publication in the BOE, in the case of the
modification of Article 16 of the Corporate Income Tax Law (LIS), the Fifth Final
Provision itself establishes that this modification will apply “with effect for tax periods
commencing on January 1, 2024”.
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