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Practical Manual for Companies 2021.

Other freedom to depreciate cases

article 12.3 of the LIS refers in letters a) and d) to the possibility of freely amortizing :

  • The elements of tangible and intangible fixed assets and real estate investments of the public limited companies and limited liability companies used for carrying out their activities, acquired during the first five years from the date of their qualification as such.

  • The tangible or intangible fixed assets of entities that are classified as priority associative farms in accordance with the provisions of Law 19/1995, of July 4, on the modernization of agricultural farms, acquired during the first five years from the date of their recognition as a priority farm.

Keep in mind:

The sixteenth Additional Provision of the LIS, as amended by the eighth Final Provision of Royal Decree-Law 34/2020, of November 17, regulates a case of free amortization for investments made in the value chain of electric, sustainable or connected mobility in the automotive industrial sector that may be made in the tax periods ending between April 2, 2020 and June 30, 2021.

For these purposes, investments in new elements of tangible fixed assets that involve the sensing and monitoring of the production chain, as well as the implementation of manufacturing systems based on modular platforms or that reduce the environmental impact, affected by the automotive industrial sector, made available to the taxpayer and that come into operation between April 2, 2020 and June 30, 2021, may be freely amortized, provided that, during the 24 months following the start date of the tax period in which the acquired elements come into operation, the total average workforce of the entity remains with respect to the average workforce for the year 2019.

The properties will not be eligible for the freedom of amortization regulated in this provision.

The maximum amount of the investment that may benefit from the free amortization regime will be 500,000 euros.

In addition, to apply this assumption of freedom of amortization, taxpayers must provide reasoned report issued by the Ministry of Industry, Trade and Tourism to qualify the taxpayer's investment as suitable. This report will be binding on the tax authorities. This measure is under the Temporary National Framework for support measures to support the economy in the context of the current COVID-19 outbreak , following European Commission Decisions SA56851(2020/N) of 2 April 2020, SA.57019 (2020/N) of 24 April 2020 and SA.58778 (2020/N) of 22 October 2020.

Note: This new assumption of freedom of amortization regulated in the Sixteenth Additional Provision of the LIS is incompatible with the assumption of freedom of amortization established in article 102 of the LIS for small entities, therefore these entities will have to choose to apply one of the two tax incentives.

Filling in form 200

When freedom of amortization is applied or has been applied to any of the elements referred to in the aforementioned letters a) and d) of article 12.3 and the Sixteenth Additional Provision of the LIS, the following adjustments must be made in boxes [ ] and [00310] "Other cases of freedom of amortization (art. 12.3 a) and d) and DA 16 LIS)" on page 12 of form 200:

  • In box [00310] of decreases, the excess of amortization over the accounting amortization related to any of the elements or investments referred to, which is tax deductible in the tax period subject to declaration, will be recorded.

  • In box [00309] of increases, the amount of the amortizations related to any of the elements or investments referred to, recorded in the tax period subject to declaration and that, by application of the aforementioned tax regulations, had already been deducted in previous tax periods through the corresponding decrease or negative adjustment to the accounting result, will be recorded. Likewise, in the case of transfer of the element that has benefited from the freedom of amortization , in the tax period in which it is transferred, the amount of the negative adjustments made previously and that have not yet been positively integrated into the tax base must be included in this box.