The Supreme Court judgement of 23 October 2023 regarding deductions from previous years in the Corporate Income Tax establishes important precedents that will have a positive impact on taxpayers.
In summary, the possibility of including in the base of the deduction for research, development and technological innovation (R&D+i) the expenses incurred in previous undeclared fiscal years is confirmed, without the need for a prior request for self-assessment rectification. This means that the deduction from previous tax years can be recovered without having to request the rectification of previously filed self-assessments, thus avoiding the interruption of the tax statute of limitations.
The judgement emphasises that what is relevant is the fulfilment of the substantive requirements of the deduction rather than the formal requirements, such as the prior submission in self-assessments.
This judgement overcomes the formalistic doctrine of the Tax Administration and the General Directorate of Taxes, which required the inclusion of deductions in the self-assessment of the fiscal year in which the expenses and investments in R&D+i activities were incurred. In practice, this meant requesting the rectification of self-assessments and interrupting the statute of limitations of the fiscal year.
This judgement represents very good news for taxpayers, as they can include R&D+i deductions from previous fiscal years in their Corporate Income Tax self-assessments that were never reported in previous self-assessments. This can be done without of interrupting the prescription of the relevant tax years.