Current and capital subsidies: distinction

The different modalities that public aid can take and its different applications give rise to different tax treatment depending on the classification that should be granted to them: Current and capital subsidies.

Capital grants

Capital subsidies are those whose primary purpose is to promote the installation or start of the activity, as well as the making of investments in fixed assets (buildings, machinery, facilities, etc.), or multi-year projection expenses and are charged as income to the same extent that the investments or the expenses incurred on them are amortized.

However, in those cases in which the assets are not susceptible to amortization, the subsidy will be applied as full income for the year in which the asset financed with said subsidy is sold or removed from inventory, applying the 30% reduction. typical of the returns obtained in a notoriously irregular manner over time .

Current subsidies

Current subsidies , are those that are normally granted to guarantee a minimum profitability or compensate for losses caused in the activity, they are computed in their entirety as one more income for the period in which they accrue. That is, when the grant of the subsidy is firmly recognized and quantified.

Notwithstanding the foregoing, if the taxpayer had opted for the collections and payments criterion, in the terms provided for in article 7.2 of the Personal Income Tax Regulation , which establishes the option of using the collections and payments to temporarily allocate the income and expenses derived from income from economic activities, the subsidy must be allocated in the tax period in which the corresponding collection of the same occurs.