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Practical Manual for Companies 2022.

Accelerated depreciation

Regulation: Article 103 LIS

1. Requirements

  • These must be new items of tangible fixed assets or real estate investments, as well as items of intangible fixed assets, assigned to economic activities.

    These elements must be found in any of the following situations:

    • Acquired from third parties and made available to the company in the tax period in which it has reduced size status.

    • Commissioned through a contract for the execution of works signed in the tax period in which it has the status of a small company and made available to the company within 12 months following its conclusion.

    • Built or produced by the company itself, in accordance with the time criteria established in the two previous sections.

  • With respect to assets that can be depreciated in an accelerated manner, the accounting entry principle of article 11.3.1 of the LIS will not apply, according to which expenses that have not been recorded in the profit and loss account or in a reserve account will not be tax deductible if so established by a legal or regulatory standard.

    Therefore, even if the excess tax depreciation resulting from the application of accelerated depreciation is not accounted for, it is allowed as a deduction from the taxable base of Corporate Tax.

2. Cost

  • As a rule, the amount of tax-deductible amortization will be the amount obtained by applying to the amortizable value a coefficient resulting from multiplying by 2 the maximum linear amortization coefficient for in the officially approved amortization tables.

    The officially approved amortization table is the one included in letter a) of article 12.1 of the LIS.

  • In the case of intangible fixed assets with an indefinite useful life referred to in article 13.3 of the LIS, acquired in the tax period in which they are considered to be of small size, the company may deduct 150 percent of the amount resulting from applying said section.

    With effect for tax periods beginning on or after 1 January 2016, Law 22/2015 of 20 July on the Auditing of Accounts repealed article 13.3 of the LIS and amended article 12.2 of said law, with all intangible fixed assets now being considered to have a defined useful life.

    Therefore, after these modifications, a reasonable interpretation of the rule allows us to consider that, within the intangible fixed assets, now commercially classified as assets with a defined useful life, referred to in article 12.2 of the LIS, those whose useful life cannot be estimated reliably, as well as in the case of goodwill, may be deducted by 150 percent of the amount that is deductible by applying to them the provisions of article 12.2 of the LIS.

3. Transitional scheme

The new Corporate Tax regulation eliminated the assumption of accelerated amortization provided for in article 113 of RDLeg. 4/2004, applicable to small companies with respect to tangible fixed assets and real estate investments used for economic operations that are subject to reinvestment.

However, the -eighth transitional provision of the LIS established transitional regime that allows small companies were applying the provisions of article 113 of the RDLeg. 4/2004, in periods beginning before January 1, 2015, continue its application with the same requirements and conditions provided for in said article:

  • Accelerated depreciation applies to items of tangible fixed assets and real estate investments assigned to economic operations in which the reinvestment of the total amount obtained from the onerous transfer of items of tangible fixed assets and real estate investments also assigned to economic operations is materialized, carried out in the tax period in which the conditions of article 108 of the RDLeg are met. 4/2004.

  • The amount of the tax-deductible amortization is the result of applying to the amortizable value a coefficient resulting from multiplying by 3 the maximum linear amortization coefficient provided for in the officially approved amortization tables.

  • The reinvestment must be made within the period between one year prior to the date of the transfer of the transferred asset and three years thereafter. The reinvestment is deemed to have taken place on the date on which the assets in which the amount obtained from the transfer is realised are made available.

  • When the amount invested is greater or less than that obtained in the transfer , accelerated amortization will be applied only to the amount of said transfer that is subject to reinvestment.