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Practical Income Manual 2021.

Current and capital subsidies

In relation to the subsidies received, capital and current subsidies must be distinguished within them.

  • Capital subsidies are those whose primary purpose is to encourage the installation or making of investments in fixed assets (land, buildings, machinery, facilities, etc.) and are recognized as income in the same extent to which the fixed assets in which they were materialized are depreciated.

    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 , which are those that are normally granted to guarantee a minimum profitability or compensate for losses incurred in the activity, are computed in their entirety as one more income for the period in which it is firmly recognized. the granting of the subsidy and its quantification, regardless of the moment in which it is received and unless the taxpayer has opted for the criteria of collections and payments in which case they will be computed in the period in which they are collected.

  • Subsidies granted to finance specific expenses : They are allocated as income in the same year in which the expenses they are financing are accrued.

    See in this regard the registration and valuation standard 18 of the General Accounting Plan.