It is the possibility of subtracting the losses you have suffered in your investments from the profits you have obtained when filing your income tax return.
Offsetting profits and losses is a fiscal tool used in personal income tax (IRPF) so that investors only pay taxes on their actual profits. It allows you to use capital losses to offset capital gains.
As an example, if you lost €500 when investing in the stock market and you gained €1,250 in investment funds, you will be able to offset one with the other and when filing your income tax return it will be as if you had only obtained €750 of profit.
Here you can see how each investment product is taxed.