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V2790-14 15 October 2014 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · inmovilizado intangible

Intangible asset depreciation deductions may be rectified if under-deducted

A telecommunications company enquired whether the termination of previous contracts constitutes irreversible impairment of an intangible asset. The Directorate General for Taxes (DGT) stated that if the asset meets the requirements to be classified as intangible, its depreciation must be deducted according to its useful life.

The question raised

Whether, due to the signing of new contracts and the termination of the previous one, it is considered that an irreversible impairment of the recognized, tax-deductible intangible has occurred.

The DGT's ruling

If the distributors' right meets the definition of an asset and the identifiability criterion of the PGC, it must be recorded as an intangible asset. For tax purposes, the amortization of intangibles with a defined useful life must be deducted within the period of said useful life. If the entity has deducted an amount lower than what would be appropriate, it may rectify its Corporate Income Tax returns.

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