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V2406-14 11 September 2014 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · deducción por inversión de beneficios

Profit reinvestment deduction may apply to land acquisition

A company enquired whether the profit reinvestment deduction under Article 37 of the Corporate Income Tax Act could be applied to the purchase of land intended for the construction of an industrial warehouse. The Directorate General for Taxes (DGT) ruled that investment in land can indeed qualify for the deduction, provided all legal requirements are met.

The question raised

Whether the deduction for investment of profits under Article 37 of the TRLIS could be applied to the portion corresponding to the investment in the acquisition of the land.

The DGT's ruling

The investment in land made in 2013 may benefit from the deduction under Article 37 of the TRLIS, provided that the conditions of said article are met. The deduction is applied in the tax period in which the asset is made available, which in this case occurs in 2013. The requirement of being used for economic activity is considered fulfilled when it occurs in the following fiscal year.

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