B Law & Tax
13 March 2024

Taxation of environmental investments: flexibility in deduction accreditation according to new DGT Resolution

In a recent binding resolution, the Directorate-General of Taxes (DGT) has relaxed its criteria regarding the accreditation of environmental deductions, establishing a maximum period of 15 years, even when investments were made in previously inspected fiscal years.

Article 39 of the Consolidated Text of the Corporate Income Tax Law (TRLIS) (Royal Legislative Decree 4/2004, of March 5) regulated a deduction for investments in assets aimed at environmental protection (such as installations to reduce atmospheric or acoustic pollution, or to promote the management of industrial waste). This deduction is not included in the current tax law -LIS- (Law 27/2014, of November 27), so it cannot be validated for investments made from January 1, 2015.

To obtain this deduction, it was necessary for investments to be confirmed by the competent Administration through the issuance of a certificate. The DGT (among others, in resolutions V2807-15, V3399-13, V1509-14, V2396-12) and some courts have recognized the possibility of validating the deduction in a tax period subsequent to the investment, as long as the validation certificate had been requested before the start of the tax declaration period, and within the legal maximum period to apply deductions (15 years).

However, on June 30, 2022, the DGT issued two resolutions (V1510-22, regarding the disability deduction, and V1511-22, regarding the R&D deduction) in which it concluded that the validation of deductions from previous fiscal years required the modification of the corresponding self-assessments, and always within the prescription period (4 years and, therefore, less than the maximum period for applying deductions).

DGT’s Conclusion regarding Environmental Investment Deductions

In response to this, on February 13th, 2024, the DGT issued a new resolution (V0012-24), referring to the deduction for investments in assets aimed at environmental protection, in which, for this particular type of deduction, it returned to the previous, more favorable criterion.

The query raised a scenario in which investments had been made between fiscal years 2008 and 2014, but validation had not been requested at the time, preventing the accreditation of the deduction. Having requested validation in a subsequent fiscal year, the query asked if it was necessary to amend the original declaration, and if this could only be done for periods not yet prescribed.

The DGT concluded that deductions for environmental investments can be validated within the maximum period of 15 years from when the investment was made, without the need to amend the self-assessment for the fiscal year in which the investment was made. Additionally, it noted that even if investments had been put into operation in a fiscal year verified by the tax administration, this did not prevent the validation of the environmental deduction in a subsequent fiscal year. Finally, it established that the 10-year period for the tax administration to verify the deduction, was calculated from the day following the end of the deadline for submitting the self-assessment including the deduction.

In conclusion, according to this criterion and generally, deductions for investments made between January 1, 2008, and December 31, 2014, could be validated in future tax declarations.

B Law & Tax International Tax & Legal Advisors.


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