Global Tax Alert: Temporary measures on the determination of the taxable base of tax groups

The Spanish Government has approved a law introducing temporary taxation of energy and of credit institutions and financial credit establishments and creating the temporary solidarity tax on large fortunes and amending certain tax rules. This law also includes, among others, a provision modifying the determination of the taxable base in the tax consolidation regime, limiting the offsetting of tax losses within entities forming part of a consolidated group at a 50% of their amount.

Key features

Under the tax consolidation regime, the taxable base of the tax group is the sum of the taxable income of all the entities belonging to the tax group.

Pursuant to the amendment introduced, for the 2023 tax period, the offsetting of tax losses of entities of a tax consolidated group with positive taxable bases will be limited by 50% of their amount.

Tax losses which cannot be offset in 2023 may be carried forward and compensated against the taxable profit of the tax group in subsequent years. In particular, the amount of the individual tax losses not included in the group taxable base, shall be included in the group tax base in equal parts in each of the first ten tax periods beginning from 1 January 2024, even in the case that any of the entities with individual tax losses is excluded from the group.

Key takeaways

Although this measure is configured as a deferral, our advice is to assess the potential impact it can have on tax groups as we cannot rule out that it is extended for future years.