The recent order of the National Court of March 23, 2021, has urged a question of constitutionality on Royal Decree-Law 3/2016, whose resolution could affect all or part of its content.

In this regulation, now questioned, various controversial and onerous measures were introduced, such as, among others, the fiscal reversal in five years of the losses due to impairment of the value of shares (the so-called portfolio provision) that had been tax deductible in periods Taxes prior to 2013.

If we start from recent judgments of the same Constitutional Court that will now review this Royal Decree-Law, among other reasons, for exceeding the limits that article 86 of the Spanish Constitution provides for any analogous legal figure, it is obvious that an analysis should be made of how the changes introduced by the regulations to be revised would affect, in the event of a probable pronouncement of unconstitutionality of the same.

To take into account its special practical importance, bearing in mind that most of the regulations contained in RD-L 3/2016 are still in force today.

1. Reversal of impairment losses

RD-L 3/2016 regulated the obligation to integrate portfolio impairment losses that had been tax deductible before 2013, at least in equal parts in the corporate income tax base in the first 5 periods starting from 1 January 2016.

This meant the retroaction with effects to tax periods sometimes quite past (and always prior to 2013) of tax losses that had been fully deductible.

A declaration of nullity of RD-L 3/2016 for being unconstitutional, would eliminate the tax adjustments made in 2016 and subsequent years, maintaining the tax effectiveness of the portfolio depreciations that had been deductible before the aforementioned 2013 financial year.

2. The limits to the compensation of negative tax bases

The compensation of negative tax bases is limited based on the turnover of the previous year. Royal Decree-Law 3/2016 modified the limits as follows.

Prior to this modification, the rule established that for the tax periods started during 2016 the limit was set at 60%.

The modification reduced the limit to 50% if the turnover of the previous year was between € 20 million and less than € 60 million, and to 25% if it exceeded it.

And for the tax periods started during 2017, according to the rule prior to RD-L3 / 2016, the limit was set at 70%.

The modification also reduced it to 50% if the turnover of the previous year was between € 20 million and less than € 60 million, and to 25% if it exceeded it.

A declaration of nullity of RD-L 3/2016 as unconstitutional should allow increasing the application of the negative tax base to entities with a turnover of more than € 20 million with retroactive effects.

3. Limits on deductions

For the years beginning on or after 1/1/2016, RD-L 3/2016 established for companies with a turnover equal to or greater than 20 million euros, a joint limit of the full quota for:

• the deduction for double international legal taxation (art. 31 LIS).
• the deduction for economic international double taxation (art. 32 LIS).
• taxes paid for imputed income or dividends from international tax transparency (art. 100.11 LIS).
• the deduction for double taxation from the transitional regime (DT 13th LIS).

In the general regime, this limitation does not exist, which means that the possible nullity of RD-L 3/2016 would allow companies to absorb up to 100% of the full quota with these deductions.

4. Negative income derived from the transfer of certain shares and the transfer of permanent establishments.

For tax periods starting on January 1, 2017, RD-L 3/2016 prevented the integration of negative income derived from the transfer of interests in entities if, if they were positive income, they would be exempt .

Likewise, RD-L 3/2016 eliminated the deduction of negative income generated in the transfer of permanent establishments abroad.

The potential declaration of nullity of RD-L 3/2016 would allow the deductibility of all the indicated losses.

The conclusion of all this is that in the face of the new possibility open in relation to the possible declaration of unconstitutionality of the regulation set forth, each entity must seek advice on the tax effects that this could cause, and especially assess whether it should take any preventive action for the purposes of avoid the prescription of exercises to which a cancellation of the affected regulations could be applicable in the future.