The determination of the consolidated tax base in the special regime of tax consolidation: eliminations and incorporations of internal results (first part)

Abstract

In the area of the special regime of tax consolidation, the article 71.1 of the corporate tax law provides that consolidated tax base will be determined adding, to the individual tax bases of each of the companies integrated in the group, the elimination of the results derived from internal operations and the incorporation of those results that have been previously eliminated and, after that, have generated an effect outside the group. Regarding the way in which those eliminations and incorporations have to be practiced, the section 2 of this article points out that they will be made pursuant to the provisions of accounting regulation. Under this premise, in this paper we analyze the accounting rules that must be followed in order to practice the appropriate eliminations and incorporations and its tax consequences. The results we have obtained allow us to admit that the application of the accounting rules in the tax area is not always easy. So, the fact that the corporate tax law doesn’t contains an express pronouncement about these issues generates doubts that obliges us to take as a starting point different law interpretations.

This article is divided into two parts. The first one includes an introduction and two sections relating to the elimination of results for internal operations of both stocks and fixed assets or investment property. In the second part the rest of eliminations for intercompany transactions are treated with the third acquisition of financial liabilities issued by the group and the elimination of dividends and internal deletions and additions of results from internal operations in the new Tax Law companies to finish with a section devoted to conclusions.