Mapfre will recover at least 19 million after canceling part of the Montoro tax reform of 2016

Mapfre plans to recover at least 19 million euros from public coffers as a result of the Constitutional Court rejecting a series of measures that were introduced in the Corporate Tax in Royal Decree Law 3/2016, approved by the Government of Mariano Rajoy. to increase revenue through this tax figure.

The insurer includes this calculation in its annual financial report. This million-dollar recovery is due to the fact that Mapfre, as a consequence of the reform, had to integrate into its tax base, by fifths, the impairment of shares that would have been tax deductible until 2012.

Since this measure has been declared unconstitutional, Mapfre will recover 19 million euros from the Treasury. The company indicates that this amount is not final and that the impact that the regulations prior to the approval of Royal Decree Law 3/2016 could have on the recovery of impairments of investees in the years 2021 to 2023 are pending to be quantified.

It is not the only concept that will positively affect to Mapfre. The Constitutional Court has yet to examine the non-deductibility of losses in the transfer of shares, which was also included in the royal decree law. Mapfre estimates that this future ruling will have a favorable impact for the group, although the final amount has yet to be quantified.

The ruling of the Constitutional Court took place on January 18. The magistrates opted for the declaration of unconstitutionality when they understood that the approval of a measure of this type to increase Collection through Corporate Tax violates the Constitutionsince by means of a royal decree-law the rights, duties and freedoms of citizens cannot be affected.

The modifications to the Corporate Tax referred to in the TC include the establishment of more severe limits for the compensation of negative tax bases, the ‘ex novo’ introduction of a limit on the application of deductions for double taxation and the obligation to integrate impairments of participations that have been deducted in previous years are automatically included in the tax base. The first two measures are only applicable to large companies, while the third can affect any taxpayer of this type of tax.

Impact of the oecd minimum tax

Mapfre’s financial report also includes the possible impact that the approval of what is known as ‘Pillar 2’ of the global tax agreement approved within the OECD will have on the group. which establishes a minimum tax rate of 15% in Corporate Tax.

Mapfre has analyzed the exposure to this legislative and fiscal change, concluding that its effective tax rate in almost all the countries in which it operates is higher than 15%, with the exception of Peru and Paraguay, where this minimum would not be reached.

In any case, Mapfre reminds us, beyond the increase in the administrative burden implied by the approval of the new regulations, “No significant economic impact is expected” for the group as a result of the application of this new standard.