International Tech Solutions ("ITS") is a multinational group with subsidiaries in Spain, Germany, France, and the UK. ITS operates in the technology sector and has been generating profits and incurring losses in the past several years. This case study covers the years 2020, 2021, and 2022.

1. ITS's Financial Data:

• 2020:

EBIT: 6 million

Interest income: 0.5 million

Interest Expense: 2.8 million

Depreciation Expense: 500,000

Amortization Expense: 500,000

Net Operating Losses (NOLs) from previous years: 5 million

Accounting net profit of the company: 2.7 million

• 2021:

EBIT: (3 million)

Interest Expense: 2 million

Depreciation Expense: 600,000

Amortization Expense: 350,000

• 2022:

EBIT: 14 million

Interest Expense: 2.5 million

Depreciation Expense: 700,000

Amortization Expense: 400,000

1. Interest Limitation Rules:

• Spain: Interest limitation rules apply, limiting the deduction of net interest expense to 30% of EBITDA, with a minimum interest limitation of 1 million.

1. NOLs Limitation:

• Spain: NOLs can be carried forward indefinitely, but only up to 70% of taxable income can be offset, with a minimum limitation of 1 million.

Tasks:

Calculate ITS's taxable income and tax liability for each year in Spain