As we informed you in a previous Tax Flashes, the Spanish Constitutional Court (CC) declared Royal Decree-Law (RDL) 2/2016, that had introduced substantial modifications in the calculation of the Corporate Income Tax (CIT) prepayments, as unconstitutional. As a result of this decision, we helped some of our clients to appeal the 2016 and 2017 CIT prepayments, and in some cases the Tax Authorities have already paid the late payment interest claimed.

In our opinion, the same reasons that led the CC to declare the unconstitutionality of RDL 2/2016 would be applicable to RDL 3/2016, stating very significant and substantial modifications on CIT, and among them:

    • New limitations to the compensation of tax losses from previous years (to 50% or to 25%) depending on the revenue,
    • non-deductibility of the losses obtained in the extinction of subsidiaries as a result of a restructuring transaction, and
    • obligation of recapturing, in a 5-year term, of the impairment losses deducted in previous years.

Based on this decision from the CC it seems very probable that an unconstitutionality procedure is filed against RDL 3/2016 and, in such event, that those provisions are declared null and void.

Nevertheless, given the wide range of measures that would be affected by such decision, the CC could limit its effects to those entities having filed the appeal. In his case, this decision would only have effects in other companies from the date of its issue.

Based on the above, we recommend an analysis of the impact in the companies of this possible declaration of RDL 3/2016 as unconstitutional, in order to value the convenience of appealing the CIT returns of the non-statute-barred periods. This decision would also have to take into account that this appeal would imply an interruption of the 4-year statute of limitation term.