Back to index
V1332-23 18 May 2023 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · inmovilizado material

Amortisation of works in leased premises determined by accounting useful life or depreciation plan

A company seeks guidance on how to amortise refurbishment works carried out in a rented premises and which percentage to apply. The DGT explains that if the works constitute tangible fixed assets, accounting amortisation is based on useful life (contract duration), while for tax purposes, an amortisation plan may be followed or effective depreciation may be justified.

The question raised

Determination of the depreciation percentage for constructions in leased real estate for Corporate Income Tax purposes. In particular, whether the percentage provided in the table of Article 12 of the LIS for buildings should be taken into account or the duration of the lease agreement.

The DGT's ruling

If the works are not separable from the asset and meet the definition of an asset, they must be capitalized as tangible fixed assets. Their accounting depreciation shall be carried out according to their useful life, which shall be the duration of the lease agreement (including extensions if there is evidence that they will occur) when this is shorter than the economic life of the asset. For tax purposes, depreciation shall be deductible if it corresponds to effective depreciation, and an amortization plan proposed to the Administration may be applied or the amount of the effective depreciation may be justified.

Book your free first meeting