It is credited, for instance, when the tax credit for losses the company expects to offset grows, or when the asset for deductible temporary differences increases, against accounts 4745 and 4740. Its mirror image is 633, negative adjustments to corporate income tax, and 630 is the current and deferred tax of the year itself. All three are defined in part five of the Plan General de Contabilidad (Royal Decree 1514/2007).
In a small SL with no deferred taxes, 638 should not move at all: if it shows up in your libro diario, ask whoever keeps the books which deferred tax asset or liability it is correcting. How you get from the accounting result to the tax due is explained in the modelo 200 guide.
A typical case: the company made losses and, out of prudence, did not record the tax credit at the time; when the business recovers and offsetting becomes probable, it recognises the credit by debiting 4745 and crediting 638 as a lower tax expense for the year. The usual mistake is using 638 to fix errors in prior years' tax, which go against reserves rather than through profit and loss.
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