Current and capital subsidies: distinction
Public aid gives rise to different tax treatment depending on the classification that should be granted to it: Current and capital grants.
Capital grants
Capital grants are those whose primary purpose is to promote the installation or start-up of the activity, as well as the realization of investments in fixed assets (buildings, machinery, installations, etc.), or multi-year projection expenses and are charged as income to the same extent as the investments or expenses incurred against them are amortized.
Therefore, the subsidy will have the character of a capital subsidy provided that its purpose is to finance the fixed assets or capital of the entrepreneur or professional. However, if its purpose is to guarantee, at the start of the activity, a minimum income or to offset expenses for the year, it must be treated as a current subsidy.
Capital grants will be recorded as income for the year in proportion to the depreciation provision made in that period for the aforementioned items or, where applicable, when their disposal, impairment correction or removal from the balance sheet occurs, even if the taxpayer has previously opted for the criterion of temporary allocation of collections and payments or the cash criterion, given its specialty and the reference that the Personal Income Tax Law makes to the specific regulations of the Corporate Tax and this, in turn, to the accounting result. Supreme Court rulings No. 392/2022, of March 29, and 398/2022, of March 30, respectively, in the appeals for cassation No. 3679/2020 ( ROJ : STS 1456/2022) and 8193/2020 (RED: STS 1285/2022).
However, in those cases where the assets are not susceptible to amortization, the subsidy will be applied as full income for the year in which the sale or write-off in inventory of the asset financed with said subsidy occurs, applying the 30% reduction typical of returns obtained in a notoriously irregular manner over time .
In accordance with Order ETD /1498/2021, of December 29, the purpose of the Digital Kit Program is to grant aid to small businesses, micro-businesses and self-employed individuals for the adoption of commercially available digitalization solutions, included in the Program's Digitalization Solutions Catalogue included on the Acelera pyme platform.
Beneficiaries will receive aid based on their size, measured by the number of employees. The right to collect arising from the resolution granting this aid is called a "digital voucher."
The beneficiary must use the granted aid to contract one or more digitization solutions from those available in a Catalog of Digitization Solutions of the Program included in the Acelera pyme platform, formalizing Digitization Solutions Provision Agreements with the Adhering Digitizing Agents.
The digital kit subsidy received, to the extent that its purpose is to finance expenses or investments of holders of economic activities, is classified as income from economic activities, in accordance with the provisions of article 27.1 of the Law of PIT.
Regarding its temporal imputation, see the paragraphcorresponding to Chapter 6.
Current grants
Current subsidies are those that are normally granted to guarantee a minimum profitability or compensate for losses incurred in the activity and are fully computed as additional income in the period in which they are accrued. That is, when the granting of the subsidy is firmly recognised and quantified, regardless of when it is received.
In this regard, please note the table in Chapter 2 relating to the aid granted to holders of economic activities affected by the DANA .
Notwithstanding the foregoing, if the taxpayer had opted for the criteria of collections and payments, in the terms provided in article 7.2 of the Regulations of the PIT, which establishes the option of using the collection and payment criterion to temporarily allocate income and expenses derived from income from economic activities, the subsidy must be allocated in the tax period in which the corresponding collection occurs.