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Practical Manual for Companies 2023.

Other freedom to depreciate cases

a) Limited and public limited companies 

Regulation: Article 12.3 a) LIS

Tangible and intangible fixed assets and real estate investments of public limited companies and limited liability companies used to carry out their activities, acquired during the first five years from the date of their qualification as such, may be freely amortized.

b) Priority associative farms

Regulation: Article 12.3 d) LIS

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, may be freely amortized.

c) Automotive industry sector

Regulation:  DA 16 LIS

Investments made in the value chain of electric, sustainable or connected mobility in the automotive industrial sector may be freely amortized in the tax periods ending between April and June 30 2021

For these purposes, investments in new items 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, related to 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 items come into operation, the total average workforce of the entity remains with respect to the average workforce for the year 2019.

Therefore, if these investments have not been fully amortized for tax purposes in the tax periods ending between April 2, 2020, and June 30, 2021, the portion that has not been amortized for tax purposes cannot be freely amortized in subsequent tax periods.

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.

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.

This assumption of freedom of amortization 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.

d) Facilities that use energy from renewable sources

Regulation: DA 17 LIS

The investments made in facilities may be freely amortized in the tax periods beginning or ending in 2023 and 2024:

  • Intended for self-consumption of electrical energy that uses energy from renewable sources in accordance with the provisions of Royal Decree 244/2019, of April 5.

  • For thermal use for own consumption that use energy from renewable sources , that replace installations that use energy from non-renewable fossil sources and that are made available to the taxpayer from the entry into force of Royal Decree-Law 18/2022, of October 18.

- Requirements

  • They must be made available to the taxpayer as of 20-11-2022 (entry into force of Royal Decree-Law 18/2022, of October 18) and come into operation in 2023 and 2024.

  • For the 24 months following the start date of the tax period in which the acquired items come into operation, the entity's total average workforce must be maintained with respect to the average workforce of the previous twelve months.

    For the of the average total workforce of the entity, the employed persons will be taken, in accordance with the terms established by labor legislation, taking into account the contracted working hours in relation to the full working day.

    In the event of failure to comply with the obligation to maintain template , the taxpayer must pay the full amount corresponding to the excess deducted plus late payment interest along with the self-assessment corresponding to the tax period in which the obligation was breached.

  • Be in possession, as applicable, of the following documentation that proves that the investment uses energy from renewable sources:

    • In the case of generation of electrical energy , the Operating Authorization and, in the case of facilities with surpluses, the accreditation of registration in the Administrative Registry of Electrical Energy Production Facilities (RAIPREE) or, in the case of facilities of less than 100kW, the Electrical Installation Certificate (CIE) in accordance with the Low Voltage Electrotechnical Regulations, in accordance with the provisions of Royal Decree 244/2019, of April 5.

    • In the case of renewable gas production systems (biogas, biomethane, renewable hydrogen), proof of registration in the Registry of gas production facilities from renewable sources regulated in article 19 of Royal Decree 376/2022, of May 17.

    • In the case of thermal renewable energy generation systems (heat and cold) industrial or process , proof of registration or report from the competent body in the Autonomous Community.

    • In the case of thermal renewable energy generation systems (heat and cold) for air conditioning or generation of domestic hot water , energy efficiency certificate issued by the competent technician after the investments have been made, indicating the incorporation of these systems with respect to the certificate issued before the start of the same.

– Maximum amount

The maximum investment amount that can benefit from this tax incentive is 500,000 euros .

– Exceptions

The following cannot benefit from this freedom of amortization:

  • Buildings.

  • Installations that are mandatory under the regulations of the Technical Building Code, approved by Royal Decree 314/2006, of March 17, unless the installation has a nominal power greater than the minimum required, in which case the part of the cost of the installation proportional to the installed power above the minimum required may be subject to this incentive.

This assumption of freedom of amortization is incompatible with the assumption of freedom of amortization of article 102 of the LIS provided for small entities, so said entities must choose to apply one of the two tax incentives.

– What is considered renewable energy?

  • That coming from non-fossil renewable sources , that is, wind energy, solar energy (solar thermal and solar photovoltaic) and geothermal energy, ambient energy, tidal energy, wave energy and other types of energy ocean energy, hydropower and energy from biomass, landfill gases, wastewater treatment plant gases, and biogas, as defined in Directive (EU) 2018/2001.

  • In the case of electricity production facilities , only that energy coming from facilities in category b) of article 2.1 of Royal Decree 413/2014, of June 6, will be considered renewable energy.

  • In the case of installations that use electrically driven heat pumps only their use for heat will be considered renewable energy based on a seasonal factor performance (SCOPnet) of 2.5 in accordance with the Commission Decision 2013/114/EU of March 1, 2013.

    In the event that such pumps are used for cold , they will only be considered to produce renewable energy when the refrigeration system operates above the minimum efficiency requirement expressed as a primary seasonal performance factor and this is at least 1.4 (SPFplow), in accordance with the provisions of Commission Delegated Regulation (EU) 2022/759 of December 14, 2021 amending Annex VII of Directive (EU) 2018 /2001.

  • In the case of thermal renewable energy generation systems (heat and cold) for air conditioning or domestic hot water generation, it will only be understood that non-renewable primary energy consumption has been improved when the non-renewable primary energy consumption indicator is reduced by at least 30 percent, or an improvement in the energy rating of the facilities is achieved to obtain an energy class "A" or "B", on the same rating scale.

    Filling in form 200

    When the 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 and seventeenth additional provisions of the LIS, the following adjustments must be made in boxes [00309] and [00310] "Other cases of freedom of amortization (art. 12.3 a) and d) and DA 16, and 17 LIS)" on page 12 of form 200:

    • In box [00310] of decreases, the excess amortization that over the accounting amortization related to any of the elements or investments referred to, 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 which, 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 item that has benefited from free depreciation, in the tax period in which it is transferred, the amount of negative adjustments made previously and that have not yet been positively integrated into the tax base must be included in this box.