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V0847-14 26 March 2014 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · deducción por inversión de beneficios

Eligibility of premises renovation works for the profit reinvestment deduction

A catering company has enquired whether renovation works carried out on its premises qualify for the profit reinvestment deduction. The Directorate General for Taxes (DGT) has ruled that if the works are necessary to bring the premises into an operational state, they are considered an increase in the value of fixed assets and therefore qualify for the deduction.

The question raised

Whether the investment deduction for profits is applicable in relation to the works for the adaptation of the premises.

The DGT's ruling

Investments classified accounting-wise as an increase in the value of tangible fixed assets may benefit from the deduction under Article 37 of the Corporate Income Tax Law (TRLIS). If the premises have not yet entered operational conditions, the expenses directly related to their commissioning form part of the acquisition price. Conversely, if the property is already operational, the treatment will depend on whether the expenses constitute repairs, renovations, extensions, or improvements according to the General Accounting Plan.

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