How to apply the revaluation reserve in corporate tax
Posted: Sun Dec 22, 2024 5:01 am
The revaluation reserve is used as a counterpart to asset revaluations. In Law 16/2012 , dated December 27 , which adopts various tax measures aimed at consolidating public finances and boosting economic activity , among other regulatory changes, in its article 9, the possibility of voluntarily accepting the updating of balance sheets was approved for taxpayers of Corporate Tax , personal income tax payers who carry out economic activities and have a permanent establishment, who keep their accounting records in accordance with the Commercial Code or are required to keep records of their economic activity.
From an accounting perspective, revaluation reserves must be recorded in our accounting program within equity, in account 114 of special reserves , which includes " those established by any new zealand girls whatsapp number mandatory legal provision, other than those included in other accounts of this subgroup", and there is an obligation to report the update operation carried out, through the second part of the statement of changes in net equity, called "Total statement of changes in net equity", which reports all the changes that have occurred in net equity.
Balance sheet updates will be carried out by applying the coefficients legally determined on:
the acquisition price or production cost, depending on the year of acquisition or production of the asset. The coefficient applicable to improvements will be that corresponding to the year in which they were made.
the accounting amortizations corresponding to the acquisition price or production cost that were tax deductible, depending on the year in which they were made.
It is important to note that the updated values may not exceed the market value of the updated assets, taking into account their state of use based on technical and economic wear and tear and the use made of them by the taxpayer.
Seven considerations to take into account regarding the revaluation reserve that affects corporate tax
1. We must take into account that the net increase in value resulting from the updating operations will be amortized, starting from the first tax period that begins on or after January 1, 2015 , during those remaining to complete the useful life of the asset, in the same terms as those corresponding to renovations, extensions or improvements.
2. The balance of the "revaluation reserve" account will not be included in the taxable base of the Corporate Tax , the Personal Income Tax or the Non-Resident Income Tax.
3. The balance of the account "revaluation reserve of Law 16/2012, of December 27" will not be available until it is verified and accepted by the tax authorities. This verification must be carried out within three years following the date of filing the declaration referred to in section 8 above.
Once the audit has been carried out or the deadline for doing so has elapsed, the account balance may be used to eliminate negative accounting results, to increase share capital or, after ten years from the date of closing of the balance sheet in which the updating operations were reflected, to freely available reserves. However, the aforementioned balance may only be distributed, directly or indirectly, when the updated assets are fully amortized, have been transferred or written off the balance sheet.
4. The revaluation reserve will entitle the holder to a deduction for double taxation of dividends and to the exemption provided for in letter y) of article 7 of Law 35/2006, of November 28, on Personal Income Tax and partial modification of the laws on Corporate Tax, Non-Resident Income Tax and Wealth Tax.
5. The application of the balance of the account "revaluation reserve of Law 16/2012, of December 27" to purposes other than those provided for in this section or before the verification is carried out or the deadline for carrying it out has elapsed, will determine the integration of the aforementioned balance into the tax base of the tax period in which said application occurs , and negative tax bases from previous tax periods cannot be offset against said balance.
6. Losses incurred on the transfer or impairment of the value of updated assets shall be reduced, for the purposes of their inclusion in the tax base, by the amount of the balance of the "revaluation reserve" account corresponding to said assets. This balance shall be available.
From an accounting perspective, revaluation reserves must be recorded in our accounting program within equity, in account 114 of special reserves , which includes " those established by any new zealand girls whatsapp number mandatory legal provision, other than those included in other accounts of this subgroup", and there is an obligation to report the update operation carried out, through the second part of the statement of changes in net equity, called "Total statement of changes in net equity", which reports all the changes that have occurred in net equity.
Balance sheet updates will be carried out by applying the coefficients legally determined on:
the acquisition price or production cost, depending on the year of acquisition or production of the asset. The coefficient applicable to improvements will be that corresponding to the year in which they were made.
the accounting amortizations corresponding to the acquisition price or production cost that were tax deductible, depending on the year in which they were made.
It is important to note that the updated values may not exceed the market value of the updated assets, taking into account their state of use based on technical and economic wear and tear and the use made of them by the taxpayer.
Seven considerations to take into account regarding the revaluation reserve that affects corporate tax
1. We must take into account that the net increase in value resulting from the updating operations will be amortized, starting from the first tax period that begins on or after January 1, 2015 , during those remaining to complete the useful life of the asset, in the same terms as those corresponding to renovations, extensions or improvements.
2. The balance of the "revaluation reserve" account will not be included in the taxable base of the Corporate Tax , the Personal Income Tax or the Non-Resident Income Tax.
3. The balance of the account "revaluation reserve of Law 16/2012, of December 27" will not be available until it is verified and accepted by the tax authorities. This verification must be carried out within three years following the date of filing the declaration referred to in section 8 above.
Once the audit has been carried out or the deadline for doing so has elapsed, the account balance may be used to eliminate negative accounting results, to increase share capital or, after ten years from the date of closing of the balance sheet in which the updating operations were reflected, to freely available reserves. However, the aforementioned balance may only be distributed, directly or indirectly, when the updated assets are fully amortized, have been transferred or written off the balance sheet.
4. The revaluation reserve will entitle the holder to a deduction for double taxation of dividends and to the exemption provided for in letter y) of article 7 of Law 35/2006, of November 28, on Personal Income Tax and partial modification of the laws on Corporate Tax, Non-Resident Income Tax and Wealth Tax.
5. The application of the balance of the account "revaluation reserve of Law 16/2012, of December 27" to purposes other than those provided for in this section or before the verification is carried out or the deadline for carrying it out has elapsed, will determine the integration of the aforementioned balance into the tax base of the tax period in which said application occurs , and negative tax bases from previous tax periods cannot be offset against said balance.
6. Losses incurred on the transfer or impairment of the value of updated assets shall be reduced, for the purposes of their inclusion in the tax base, by the amount of the balance of the "revaluation reserve" account corresponding to said assets. This balance shall be available.