Capitalisation reserve: Key changes in the maintenance period and DGT criteria

Important new features that facilitate the application of tax deductions associated with the capitalization reserve.

The period for maintaining the capitalization reserve is reduced and the DGT modifies its criterion on whether the reduction of capital with return of contributions, and its consequent reduction of equity, affects the non-compliance on the maintenance of equity.

The capitalization reserve is a tax incentive for corporate income tax savings, which allows the taxable income to be reduced by 10% of the increase in equity, with the legal requirement that the increase in equity would be maintained in an unavailable reserve for a period of 3 years from the end of the tax period.

Therefore, the previous period of maintenance of the capitalization reserve of 5 years becomes 3 years, based on article 4.2 of Royal Decree-Law 4/2024, of June 26.

In addition the DGT (General Tax Directorate) modifies its criteria in its recent resolution of March 7, 2024 (V0327-24), where it points out that, if the regulations regarding the capitalization reserve establish that the increase via shareholder contributions will not be computed for its calculation, it does not make sense that the capital reduction due to the return of shareholder contributions is computed to determine the decrease - or non-increase - of shareholders' equity.