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V2249-16 ·24 May 2016 ·consulta-vinculante Medium impact
Tax

Improvements to leased premises are amortised over the contract term if shorter than their economic life

A company enquired whether it was correct to use straight-line amortisation for works and renovations in a commercial premises based on the duration of its franchise agreement. The DGT ruled that if investments are not separable from the asset, they must be recognised as tangible fixed assets and amortised over their useful life, which shall be the contract term if it is shorter than the asset's economic life.

In 6 key points

How it affects those involved

This ruling clarifies the accounting and tax treatment of leasehold improvements, ensuring that amortisation periods align with the legal right to use the asset when the contract term is shorter than the asset's natural lifespan.

Lifecycle

2016-05-24PublishedPublished in the BOE
Official text Based on BOE data (boe.es). Information, not advice.

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This analysis is informational only and does not constitute legal advice or create a client-adviser relationship. BM Consulting.
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