Accounting profit in spainish legislation

The main goal of this paper is to study the accounting profit in the spanish jurisdiction. For

this purpose the accounting profit and its integration in accounting and tax legislation of Spain

were analized. In accounting terms the study focus on the Comerce Code and Accounting law.

On the one hand, the assumption of accounting profit in corporate income tax law and the

significance of its economic periodization were investigated. The results show that the spanish

Comerce Code recognizes a relevent role to accounting profit. It also recognizes that it is very

important for the companies to give financial information about their economic lives. It

establishes specific issues, such as the elements of the annual accounts, and how the net profit

should be determined. On the other hand, an effort was made to understand and analyse the

relevence of the periodization of the corporations´ economic life. It happens having as

underlying the accrual basis' accounting principle. This may occur due to several economic,

financial and legal reasons. Concerning the economic reasons it is necessary to define

economic periods for management evaluation and the distribution of the results to the

company's owners. Financially, the company has to assure all the financial needs to maintain

its activity. In legal terms, it is important to determine tax periods that can establish the tax due

by the entity's economic performance. The analysis of article 10 of the spanish corporate

income tax law allows us to conclude that the spanish tax legislator recognizes the tax direct

valuation method to determine the taxable profit. It means that the net profit determined under

accounting rules is used to calculate the taxable basis that will be subjected to pay income tax

by the national economic entities.