Offsetting Prior-Year Losses: How Tax Loss Carryforwards (BINs) Work in Spanish Corporate Income Tax

When a company closes a year with a tax loss, that loss isn’t wasted: it creates a negative taxable base (BIN, from the Spanish “base imponible negativa”) that can be deducted from the profits of future years, reducing the Corporate Income Tax you pay. It’s one of the most valuable tax tools available, and also one of the most poorly managed. Here is how it works in 2026, without tying it to figures that change every year.

What a BIN is and when it arises

A BIN arises when, after applying tax adjustments to the accounting result, the taxable base on the return comes out negative. Note that this is not the same as the accounting loss. A non-deductible expense or a temporary adjustment can make the tax loss larger or smaller than the one you see in the profit and loss account.

Offsetting is an option for the company, not an automatic obligation: you can apply the full available BIN, only part of it, or none at all, always within the limits. If there are several BINs from different years, they are applied in order of age, starting with the oldest.

Offset limits: how much you can deduct each year

The law sets no maximum time limit for offsetting: BINs can be carried forward indefinitely. What does limit you is how much you can apply in a single year, and that depends on the size of the company, measured by its net turnover:

• For moderate turnover (the usual case for self-employed professionals operating through a company, and for SMEs), the general limit is 70% of the taxable base before offsetting.
• For larger companies, the percentage drops in steps.
• In any case, the rules guarantee that you can offset up to €1 million per year, even if that exceeds the percentage.

Example 1. An SME with a pre-offset base of €100,000 and pending BINs of €150,000 can offset the full €100,000, since it is well below the million mark. Its base falls to zero and €50,000 of BINs remain for the future.

Example 2. A company with a pre-offset base of €3,000,000 and BINs of €5,000,000 can only apply 70%, that is, €2,100,000. It pays tax on €900,000 and carries forward €2,900,000.

There are also anti-abuse safeguards: for example, if control of a company with BINs changes hands and it had little real activity, the right to offset them may be restricted. It’s worth checking this before any sale of shares.

Substantiation, statute of limitations and where they go on Form 200

This is the most common mistake. The fact that BINs don’t expire doesn’t mean the tax authorities can’t review them. The Administration’s right to audit a BIN lapses after ten years, counted from the day after the filing deadline for the return of the year in which it arose, rather than the usual four. Once that period has passed, you must be able to substantiate the BIN in order to offset it:

• You must have filed the return for the year in which the loss arose.
• You must keep the accounting records and books, with supporting documents for income and expenses.
• You must have filed the annual accounts with the Commercial Registry.

If you can’t prove where a BIN came from, the offset may end up being reassessed, with interest and a possible penalty. Keeping the documentation is therefore part of the tax asset itself.

On Form 200, BINs appear in two places. The tax computation shows the amount you offset that year, which reduces the taxable base. And the section dedicated to negative taxable bases details, year by year, the origin, the amount applied and the amount still pending. Box numbers change with each year’s form, so always check them against the current version and don’t copy them from the previous year. If a BIN arose in a given year and you didn’t report it on that year’s Form 200, you’ll have a substantiation problem later.

One last tip: offsetting is not the only mechanism that interacts with the tax base. If the company applies other reductions, such as the capitalisation reserve, the order in which they are applied affects the final result. Check it before filing.

At Zythos Business we track each company’s BINs year by year: their origin, what has been offset and what remains, with the documentation kept in order in case the tax authorities ask for it. That way, when a profitable year arrives, we know how much can be used, and we avoid both overpaying and offsetting without support.