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The Supreme Court establishes the non-retroactive deductibility of expenses in Corporate Tax

Marco Fernández Jun 3, 2024

Discover the Supreme Court's new interpretation on the remuneration of administrator´s that is not provided for in the company bylaws.

The Supreme Court rules that companies recording an expense in a year later than when it was incurred, must deduct it in the corporate tax return for the year it is recorded, not retroactively.

In its ruling of April 23, the court interprets the timing of expense recognition under Article 11.3 of the Corporate Tax Law to mean that, even if expenses are mistakenly recorded in a later tax period than when they were incurred, they must be taxed when recorded, as long as it does not result in lower taxation than would have been appropriate.

The Supreme Court confirms that the allocation of expenses in Corporate Tax must follow the accrual criterion, even when they have been recorded in a different period, so they must be deducted in the period in which they are recorded.

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