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Practical Income Manual 2021.

2. Other amortization systems

Other amortization systems are:

  • According to constant percentage

    Regulations: Art. 5 of the Regulations of IS

    It is understood that depreciation is effective when it is the result of applying a constant percentage on the value pending amortization. Said constant percentage will be determined by weighting the linear amortization coefficient obtained from the amortization period according to officially approved amortization tables, by the following coefficients:

    • 1.5 , if the item has a payback period of less than 5 years. 

    • 2 , if the item has a amortization period equal to or greater than 5 years and less than 8 years.

    • 2.5 , if the item has a payback period equal to or greater than 8 years.

    The constant percentage thus determined cannot be less than 11 percent.

    The amount pending amortization in the tax period in which the useful life ends will be amortized in said tax period.

    Buildings, furniture and fixtures cannot be amortized using the constant percentage amortization method.

    This amortization system is regulated in article 5 of the Corporate Tax Regulation, approved by Royal Decree 634/2015, of July 10.

  • According to digit numbers

    Regulations: Art. 6 of Regulation IS

    It is understood that depreciation is effective when it is the result of applying the digit number method.

    The sum of digits will be determined based on the amortization period, which may be any of those included between the maximum period and that deducted from the maximum linear amortization coefficient according to the officially approved amortization table.

    Buildings, furniture and fixtures will not be eligible for depreciation using digit numbers.

    This amortization system is regulated in article 6 of the Corporate Tax Regulation, approved by Royal Decree 634/2015, of July 10.

  • According to special plan

    Regulations: Art. 7 of Regulation IS

    It is calculated according to a scheme formulated by the taxpayer and accepted by the Tax Agency.

    The characteristic conditions and requirements are established in article 7 of the Corporate Tax Regulation, approved by Royal Decree 634/2015, of July 10.

  • For justification of amortization

    It is understood that depreciation is effective when the taxpayer justifies its amount.