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V0168-17 24 January 2017 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · inmovilizado material

Deductibility of impairment losses on poultry depends on accounting classification as fixed assets or inventory

A poultry company has requested clarification regarding the deductibility of losses caused by diseases in its birds. The DGT has ruled that if the birds are classified as tangible fixed assets, impairment losses are not directly deductible, but must be accounted for through the depreciation of the tax difference. Conversely, if they are classified as inventory, the impairment is directly deductible.

The question raised

Deductibility of both proposals in Corporate Income Tax.

The DGT's ruling

If the birds are tangible fixed assets, impairment losses are not tax deductible, and the difference between the carrying amount and the tax value must be integrated through the amortization method provided in Article 20 of the LIS. If the birds have the accounting status of inventory, impairment losses are tax deductible. Regarding the amortization of fixed assets, it shall be deductible if it corresponds to the effective depreciation according to Article 12 of the LIS.

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