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V1761-19 10 July 2019 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · subvenciones

Grants for asset construction are not considered rental income for Corporate Tax relief

An entity sought clarification on the tax treatment of a grant for housing developers, its impact on rental tax relief, and the deductibility of impairment losses. The DGT ruled that the grant is recognised according to accounting criteria and does not qualify as rental income for the purpose of the relief.

The question raised

1. Regarding the subsidy approved under "developer aid" which the consultant is pending to receive:

The DGT's ruling

Subsidies for the construction of assets are recognized as income in proportion to the depreciation of the asset or when its derecognition or impairment occurs. These subsidies are not considered income derived from the leasing of housing, and therefore the 85% tax relief does not apply to them. Losses due to impairment of fixed assets are not immediately deductible, but are instead integrated into the taxable base over the remaining useful life, unless the impairment is irreversible regarding the portion financed free of charge, in which case it is integrated into the fiscal year of the accounting recognition.

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