Skip to content
Back to index
V1082-16 17 March 2016 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · deterioro de valor

Impairment of land held as inventory is deductible if recognised in accounts

A real estate developer has requested clarification regarding the tax and accounting treatment of the impairment of its land holdings. The DGT has ruled that, if the land is classified as inventory, the impairment loss shall be deductible provided that the requirements for accounting recognition, accrual, and substantiation are met.

The question raised

Tax and accounting treatment of the impairment loss of land plots.

The DGT's ruling

The impairment of inventories must be recognized as an expense in the profit and loss account when their net realizable value is lower than the cost. For tax purposes, this expense shall be deductible in Corporate Income Tax provided that the conditions of accounting recognition, accrual basis, and documentary justification are met, and it is not a non-deductible expense according to the LIS.

Book your free first meeting