Taxation of the fund for cooperative education and promotion and other public interest purposes (COFIP)

Abstract

The approval of the new Basque Cooperatives Act (Law 11/2019) is an opportunity to address the tax regime applicable to the fund allocated to cooperative education and promotion and other public interest purposes, known by its initials in Spanish as the COFIP. This paper aims to analyse the relevant tax regulations for this fund in the Historical Territories of the Basque Country. The taxation provisions applicable to cooperatives owe their specific character to two elements. Firstly, to the fact that a set of rules is needed to adapt the tax regulations to the characteristics of all cooperative societies, which are different from corporations. Secondly, to the fact that some tax advantages can be enjoyed by those cooperative societies that meet certain requirements. The first applicable rules are the so-called “adjustment rules”. These are particularly relevant to the deductibility as an expense of the amounts allocated to the COFIP. The second rules, namely, the tax advantages for which cooperatives that meet certain requirements are eligible, are also worth discussing, because some of these requirements are linked to the correct application or use of the COFIP.