As has been customary in recent years, taxpayers (and their advisors) have to wait for the Tax Administration to issue its opinion on some regulatory point, recently put into effect, that the legislator (probably, the pre-legislator) does not has been able to express it clearly enough so that its application does not generate conflicts, usually free of charge.

In article 25 of Law 27/2014, on Corporate Tax (LIS), we find one of these cases: letter b) of section 1 talks about the provision of the capitalization reserve, which constitutes one of the essential requirements to be able to apply the reduction of the tax base referred to in said article.

And neither in this letter nor in any other part of the text does it establish the moment in which the General Meeting must make the corresponding agreement. Let us not forget that the Board is the only corporate body that can decide on the distribution of the entity's profits and, therefore, this circumstance requires it.

In my opinion, the capitalization reserve cannot be created or provided before the fiscal year in which the reduction referred to in the cited article is intended to be applied has closed, that is, when the intention is to apply that reduction in the settlement of the tax for a year, the corresponding reserve may not be allocated until the following year. Let's see why it seems to be the option that is closest to the literal of the aforementioned article 25 LIS.

Regarding the amount, there seems to be a certain consensus among tax experts that, although an indirect calculation method has been chosen, the basis of the reduction, that is, the increase in own funds, will generally coincide with the amount of the profits from the previous year (that of application of the reduction) that have not been distributed, reduced, where appropriate, in the provisions to the legal and statutory reserves. This is where the “first clue” appears since, in the description of this indirect method detailed in section 2, it talks about positive difference between the own funds existing at the end of the year… and the own funds existing at the beginning of the yearThat is to say, although said data can be foreseen before the deadline for preparing the annual accounts has expired, the General Meeting will not be able to discuss the provision of this capitalization reserve until the data on own funds at the close of the year is known. year in which the reduction of article 25 LIS is intended to be applied, or what is the same, until the annual accounts for said year are approved.

Secondly, there is nothing in the text of this article that indicates that said reserve must appear in the balance sheet of the same year in which the reduction of the tax base is applied; in letter b) it reads which must appear in the balance sheet with absolute separation and appropriate title, so it does not seem appropriate to understand, from my point of view, necessarily, that said balance sheet must be the one that has not yet been closed even though the tax benefit is referred to its tax base.

And finally, there is nothing stipulated in article 25 regarding which items the capitalization reserve must be allocated to; Simply, the General Meeting must agree that said reserve be allocated from freely available reserves or, where appropriate, from the results of the year. But this will be done, as has been said, once the fiscal year to which the reduction for this concept corresponds has closed.

It is interesting to mention here the case of article 105.3 LIS, in which it is expressly established with charge to which items small entities must provide the new “equalization reserve” (positive results of the year in which the reduction is carried out based taxable amount or the first positive results of subsequent years), but said allocation must also be approved by the General Meeting and the latter will not be able to make any decision until the year is closed and the annual accounts approved.

Finally, I believe that it does not seem to make much economic – or legal – sense for the Board to adopt “provisional” agreements on the provision of reserves to force this (capitalization reserve) to appear unnecessarily at the end of the year in which the reduction is applied.