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Form 100. Personal Income Tax Return 2019

Amortization provisions

A deductible expense is the amount recorded in the concept of amortization of tangible and intangible fixed assets and real estate investments that corresponds to the effective depreciation suffered by the different elements due to operation, use, enjoyment or obsolescence.

Depreciation is considered effective when it is the result of applying any of the methods provided for in article 12.1.a of the Corporate Income Tax Law, which in summary are the following:

  1. Linear amortization coefficients established as of January 1, 2015 by the amortization table included in article 12.1.a) of the LIS.

  2. Constant percentage on the value pending amortization.

  3. Digit number method.

  4. Plan formulated by the taxpayer and accepted by the Administration.

  5. Justification of the amount by the taxpayer.

The depreciation basis is the purchase price of the item, including any additional costs incurred until it is put into working order, or its production cost, excluding, where applicable, the residual value.

Amortization will be carried out from the moment the item is put into working order if it belongs to tangible fixed assets or real estate investments, or from the moment it is in a condition to produce income for intangible fixed assets.

Intangible fixed assets are now considered assets with a defined useful life and are generally amortized based on their useful life. However, when it cannot be estimated reliably, the amortization will be deductible up to the maximum annual limit of one twentieth of its amount. The amortization of goodwill will be deductible up to a maximum annual limit of one twentieth of its amount (5 percent).

The provision in a financial year of amortizations greater than those permitted for tax purposes does not constitute a deductible expense, without prejudice to the fact that the excess may be deductible in subsequent periods.

Assets for which, in tax periods beginning before 1 January 2015, a different amortisation coefficient was being applied to that which corresponded to them by application of the new amortisation table provided for in article 12.1 of the LIS, will be amortised during the periods remaining until completing their useful life, in accordance with the aforementioned table, based on the net tax value of the asset existing at the beginning of the first tax period beginning on or after 1 January 2015.

Special procedures

  • Small companies

  • Financial leasing

Heritage elements used

In the case of tangible fixed assets and real estate investments that are acquired used , the calculation of depreciation will be carried out according to the following criteria:

  • If the acquisition value of the used item is taken as the basis for depreciation, the maximum coefficient that can be used will be double the maximum linear depreciation coefficient set in the depreciation table.
  • If the original acquisition price or production cost is taken as the amortization base, the maximum linear amortization coefficient set in the amortization tables for said element will be applied.
  • If the original purchase price or production cost is not known, the taxpayer may determine it through expert analysis, and once established, the procedure will be followed as provided in the previous letter.

For these purposes, buildings less than ten years old will not be considered used heritage elements.

Amortization freedom assumptions

Freedom of depreciation in new elements of fixed tangible assets. Transitional regime for amounts pending application as of March 31, 2012 (Additional Provision Thirtieth of the Personal Income Tax Law and Transitional Provision Thirteenth of the LIS)

Taxpayers who, as of March 31, 2012, had amounts pending application for the following investments that have enjoyed the freedom of amortization provided for in the Eleventh Additional Provision of the consolidated text of the LIS:

  • Investments made in 2009 and 2010 to which the freedom of amortization with maintenance of employment of the Eleventh Additional Provision of the consolidated text of the LIS is applicable, as amended by Royal Decree-Law 6/2010, of April 9, on measures to promote economic recovery and employment.
  • Investments made from January 1, 2011 to March 30, 2012 to which the freedom of amortization without maintaining employment of the Eleventh Additional Provision of the consolidated text of the LIS is applicable, as amended by Royal Decree-Law 13/2010, of December 3, on actions in the fiscal, labor and liberalizing fields to promote investment and job creation.

Taxpayers who, as of March 31, 2012, have not fully amortized the investment made for this concept may continue to apply the amounts pending under the conditions and with the requirements established by the Eleventh Additional Provision of the consolidated text of the LIS, as amended by Royal Decree-Law 6/2010, of April 9, and by Royal Decree-Law 13/2010.

The amounts pending amortization may be applied up to the limit of the positive net income of the economic activity to which the assets have been allocated prior to the deduction of the pending amounts and, where applicable, to the 5% reduction for provisions and expenses that are difficult to justify provided for in the simplified direct estimation method.

Freedom of amortization (article 12.3 of the LIS)

Yes, the following items can be freely amortised:

  • The elements of tangible and intangible fixed assets , excluding buildings, used for research and development activities.
  • Buildings can be depreciated on a straight-line basis over a period of 10 years, from when they are put to use for research and development activities.
  • The research and development expenses capitalized as intangible assets, excluding amortization of items that enjoy free amortization.
  • The elements of tangible or intangible fixed assets of entities that have the qualification of priority associative farms in accordance with the provisions of Law 19/1995, of July 4, on the modernization of agricultural farms, acquired during the first five years from the date of their recognition as a priority farm.
  • New tangible fixed assets, whose unit value does not exceed 300 euros, up to the limit of 25,000 euros referring to tax period . If the tax period were less than one year long, the stated limit would be the result of multiplying 25,000 euros by the corresponding proportion between the duration of the tax period with respect to the whole year.