The Supreme Court confirms the deductibility of IRPF debt as long as it exists on the date of the Wealth Tax accrual.

In its ruling of February 15, 2023, it has confirmed the existing jurisprudence on the deductibility of IRPF debt in the taxable base of the Wealth Tax.

It should be noted that it has done so by specifying that only debts existing on the date of the Wealth Tax accrual are deductible, and any debts payable after the accrual date will be deductible.

In the case analyzed by this high court ruling, the taxpayer sought to deduct from the Wealth Tax declaration for the year 2013, the IRPF debts corresponding to the years 2011, 2012, and 2013 that arose as a result of tax inspections and were notified in 2017. However, the Supreme Court determined that these IRPF amounts were not deductible as they did not exist on the Wealth Tax accrual date (December 31, 2013).

The expenses that the taxpayer can deduct from the taxable base of the Wealth Tax include debts that have to be paid. Within these debts are tax debts, especially those of the IRPF. On some occasions, these debts become litigious and proceedings are opened to resolve them, which can delay the determination of the debt at the time it should be attributed to the Wealth Tax.

The Supreme Court considers that only IRPF debts that are due at the time the Wealth Tax is calculated can be deducted. This means that the taxpayer’s debt to the Tax Agency for IRPF must have been accrued in the same tax year in which it is intended to be deducted. In the mentioned case, the IRPF settlements did not exist on the Wealth Tax accrual date, and therefore could not be deducted.

Beyond the specific case analyzed in the Supreme Court’s ruling, the issue definitively resolved in favor of taxpayers is that they can deduct IRPF debts that exist on the date of the Wealth Tax accrual, thus closing an issue that could sometimes be disputed by the reviewing bodies of the AEAT.

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