Depreciation of intangible fixed assets

Law 22/2015, of July 20, on Account Audit, in its first Final Provision, modified article 39.4 of the Commercial Code, establishing that for the financial statements that correspond to the years that begin on or after 1 January 2016, all elements of intangible assets are considered assets with a defined useful life, becoming amortizable over that useful life. However, in cases where the useful life of these elements of intangible assets cannot be determined reliably, they will be amortized over a period of 10 years, unless a legal or regulatory provision establishes a different period.

Regarding goodwill, article 39.4 of the Commercial Code allows its accounting amortization with effect from January 1, 2016, provided that it is acquired for consideration. Unless proven otherwise, the useful life of goodwill will be presumed to be ten years.

As a consequence of the modifications made in the accounting field, the aforementioned Law 22/2015 modified article 12.2 of the LIS establishing that for tax periods that begin on or after January 1, 2016, intangible assets will be amortized based on their useful life, and when this cannot be estimated reliably, amortization will be deductible with the maximum annual limit of one twentieth of its amount.

Regarding goodwill, article 12.2 of the LIS establishes the deductibility of the amortization of goodwill with an annual limit of one twentieth of its amount.

As a consequence of these modifications, the accounting allocation of the amortization expense of these intangible assets will be required in order to apply their tax deductibility.

Therefore, for tax periods beginning on or after January 1, 2016, this new regime determines that the elements of intangible assets will be amortized for accounting and tax purposes, taking into account their useful life . When the useful life of these items cannot be determined reliably , it will be amortized at 10 percent per year according to accounting regulations and at a maximum of 5 percent annually according to tax regulations.

Regarding goodwill , it will be amortized in the accounting field at 10 percent annually and as a maximum at 5 percent annual cent in the fiscal field.

Filling in form 200

This difference in criteria from the tax and accounting point of view will generate the need to make adjustments to the corporate income tax base that must be entered in the boxes. [01005] and [01006] «Amortization of intangible assets and goodwill (art. 12.2 LIS) and amortization of DT 13.1 LIS» on page 12 of model 200. These corrections will be collected in the first years of the element's useful life in the box [01005] of increases and subsequently, to the extent that said positive adjustments revert, in the box [01006] of decreases.

Transitional regime (DT 13.1 of the LIS)

A transitional regime is established for the application of the amortization table provided for in the LIS in assets acquired prior to its entry into force, according to which:

• Asset elements for which in tax periods beginning before January 1, 2015, a different amortization coefficient was being applied to the one that would apply if the amortization table provided in Article 12.1 of the LIS, will be amortized during the remaining tax periods until completing their new useful life, in accordance with said table, on the net tax value of the asset existing at the beginning of the first tax period that begins on January 1. of 2015.

• Taxpayers who were applying a amortization method different from the one resulting from applying the linear amortization coefficients in tax periods beginning prior to January 1, 2015 and, in application of the amortization table provided in the LIS corresponds to a different amortization period, they may choose to apply the straight-line amortization method in the period remaining until the end of their new useful life, on the net tax value existing at the beginning of the first tax period that begins from January 1, 2015.

• The new assets acquired between January 1, 2003 and December 31, 2004 will apply the maximum linear amortization coefficients provided for in the LIS, multiplied by 1.1.

In application of the different criteria established by the thirteenth transitional provision of the LIS, the taxpayer must make adjustments to the tax base of the Corporate Tax, whose corrections will be collected in box [01005] of increases and in box [01006] of decreases.