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Practical Income Manual 2021.

Affected heritage elements

Specific valuation standard

Regulations: Articles 37.1.n) Law Personal Income Tax and 40.2 Regulations

Without prejudice to the application of the specific valuation rules discussed so far that, where appropriate, may be applicable, for the determination of the capital gain or loss derived from elements affected or disaffected less than three years prior to the date of transmission, the following details must also be taken into account:

1. The acquisition value of the transmitted element is constituted by its accounting value . This value is made up of the following components:

Note: As of January 1, 2015, the monetary correction coefficients provided for in the Corporate Tax to update the acquisition value of the transferred asset element disappeared, in these cases.

  1. The acquisition value, if the item was purchased from third parties .

    Said value will be the real amount for which it would have been carried out, including the additional expenses that occur until it is put into operating condition, as well as the financial expenses accrued before the entry into operation of the asset that, being susceptible to activation according to the General Accounting Plan, they would have been capitalized or activated.

  2. The production cost, if the element has been produced by the taxpayer's own company .

    This value will be the acquisition cost of the raw materials consumed and other incorporated elements, as well as the proportional part of the direct and indirect costs that must be attributed to their production.

  3. In the case of assets that have been affected by the activity after their acquisition, the following cases must be distinguished:

    • Affectation made after January 1, 1999 . In this case, the value of the asset at the time of the impact will be taken as the acquisition value, and the date of acquisition will be taken as the date corresponding to the original acquisition.

    • Affectation made prior to January 1, 1999 . In this case, the acquisition value must be taken as the one resulting from the criteria established in the Wealth Tax regulations at the time of the affectation and as the acquisition date the one that corresponds to the affectation.

  4. Whatever the value of the above prevails, its amount will be increased or decreased by the following amounts:

    (+) The cost of investments or improvements made in the transferred element.

    (-) The amount of tax-deductible amortization, calculating, in any case, the minimum amortization.

    Exceptions to this last rule are elements assigned to economic activities that are transferred after March 31, 2012, when they have enjoyed the freedom of amortization with or without maintenance of employment provided for in the thirtieth Additional Provision of Law Personal Income Tax . 

    Precision: In relation to the amortization of intangible assets with an indefinite useful life, it should be noted that, while in the direct estimation methods, both normal and simplified, amortization must be carried out in accordance with the regulations of IS , in the objective estimation method there is a specific tax amortization regime with maximum amortization percentages of 15 percent and minimum of 10 percent, which does not distinguish between intangible assets of defined or indefinite duration and which has remained unchanged to this day. . However, outside of the objective estimation method, the regulation of the amortization of intangible assets with an indefinite useful life has undergone profound modifications both in its commercial and accounting aspects and also in the tax aspects of IS . In the latter, until January 1, 2016, the tax deductibility of the amortization of intangible assets of indefinite duration was not admitted, so it is not possible to speak in relation to periods prior to said date of a "minimum amortization" of such assets in the meaning mentioned in article 40 of the Personal Income Tax Regulation (Resolution of the Central Economic-Administrative Court of February 10, 2020, in unification of criteria).

    Less the amount of partial disposals that, if applicable, had been carried out previously, as well as the losses suffered by the asset element.

    In summary:

    ACQUISITION VALUE (OR PRODUCTION COST OR EFFECTIVE VALUE)

    (+) IMPROVEMENTS

    (-) AMORTIZATIONS + PREVIOUS DISPOSALS + LOSSES

    = BOOKING VALUE OF THE EQUITY ITEM

2. The reducing coefficients of the transitional regime are not applicable to the capital gains obtained.

Note: For the purposes of applying the reducing coefficients of the transitional regime, assets not assigned to economic activities will be considered those in which the disengagement of these activities has occurred more than three years prior to the date of transfer.