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Practical Manual for Companies 2021.

Depreciation of intangible fixed assets

Law 22/2015, of July 20, on Account Auditing, in its First Final Provision, modified article 39.4 of the Commercial Code, establishing that for financial statements corresponding to fiscal years beginning on or after January 1, 2016, all intangible fixed assets are considered assets with a defined useful life, becoming amortizable over that useful life. However, in cases where the useful life of these intangible assets cannot be determined reliably, they will be amortized within 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 1 January 2016, provided that it is acquired for valuable consideration. Unless proven otherwise, the useful life of goodwill shall be presumed to be ten years.

As a result of the changes made in the accounting field, the aforementioned Law 22/2015 modified article 12.2 of the LIS establishing that for tax periods beginning on or after January 1, 2016, intangible assets will be amortized based on their useful life, and when this cannot be estimated reliably, the amortization will be deductible up to a 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 result of these changes, 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 intangible fixed assets will be amortized for accounting and tax purposes, based on their useful life . When the useful life of these elements cannot be reliably determined , they will be depreciated at 10 percent per year according to accounting regulations and at a maximum of 5 percent per year according to tax regulations.

Regarding the goodwill , it will be amortized in the accounting field at 10 percent annually and at a maximum of 5 percent annually in the tax field.

Note:

The thirty-fifth transitional provision of the LIS a transitional regime whereby the provisions of article 12.2 of said regulation will not be applicable to intangible assets, including goodwill, acquired in tax periods beginning before January 1, 2015, from entities that form part with the acquirer of the same group of companies according to the criteria established in article 42 of the Commercial Code, regardless of residence and the obligation to prepare consolidated annual accounts.

Filling in form 200

This difference of criteria from a fiscal and accounting point of view will generate the need to make adjustments to the tax base of the Corporate Tax that must be recorded in boxes [01005] and [01006] "Amortization of intangible fixed assets and goodwill (art. 12.2 LIS) and amortization of DT 13.1 LIS" on page 12 of form 200. These corrections will be recorded in the first years of the element's useful life in box [01005] of increases and subsequently, to the extent that these positive adjustments are reversed, in 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:

  • Assets for which, in tax periods beginning before 1 January 2015, different amortisation coefficient was being applied that which would apply if the amortisation table provided for in article 12.1 of the LIS were applied, will be amortised during the tax periods remaining 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 beginning on or after 1 January 2015.

  • Taxpayers who were applying a amortization method than resulting from applying the linear amortization coefficients in tax periods beginning before January 1, 2015 and, in application of the amortization table provided for in the LIS, were assigned a different amortization period, may choose to apply the linear amortization method in the period remaining until the end of their new useful life, on the taxable net value existing at the beginning of the first tax period beginning on or after January 1, 2015.

  • assets acquired between January 1, 2003 and December 31 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 taxable base of the Corporate Tax, the corrections of which will be recorded in box [01005] for increases and in box [01006] for decreases.