Changes in the Capitalization Reserve Introduced by Royal Decree-Law 4/2024

Royal Decree-Law 4/2024, dated June 26, has introduced significant changes to the
regulation of the capitalization reserve in Article 25 of the Corporate Income Tax Law (CITL).
These changes aim to increase the incentive for this tax reserve.

Main Changes in the Capitalization Reserve

Effective from January 1, 2024, the following changes will be implemented:
• Increase in the reduction percentage: It rises from 10% to 15%.
• Reduction in the maintenance period: The maintenance period for the increase in
equity and the unavailability of the capitalization reserve is reduced from five to three
years.

Transitional Regime

A transitional regime is introduced for the maintenance period of the increase in equity and
the unavailability of the capitalization reserve that has not yet expired:
• This new three-year period will apply to increases in equity and capitalization
reserves that have not yet met their maintenance period at the beginning of the first
tax period starting on or after January 1, 2024.
• To formalize this change, Transitional Provision Forty-Third is added to the CTIL.

Conclusion

The changes introduced by Royal Decree-Law 4/2024 have a significant impact on the
capitalization reserve, offering greater tax incentives to companies. It is crucial for businesses
to be aware of these changes and adjust their tax strategies accordingly.
At UHY Fay & Co, a firm with over 40 years of experience in professional services, we keep
you informed about all legislative changes. We recommend that you stay tuned to our news.