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V3170-14 26 November 2014 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · inmovilizado intangible

Amortisations of third-party adapted software are deductible up to 10% of cost

A company consulted on the tax treatment of amortisation of a third-party developed claims management software and on the exemption of profits from a Colombian branch. The DGT ruled that the software is a deductible intangible asset with limits, and profits from the Colombian branch may be exempt.

The question raised

1. What would be the tax treatment of the depreciation of intangible fixed assets corresponding to the capitalization of expenses for the creation of an adaptation of the claims management software?

The DGT's ruling

Software adaptation developed by third parties, if it meets the definition of an asset and identifiability under the PGC, must be recorded as an intangible asset. For tax purposes, its depreciation is deductible subject to an annual limit of one tenth of its amount, pursuant to Article 11.4 of the TRLIS. Likewise, positive income from a permanent establishment in Colombia is exempt in Spain under Article 22 of the TRLIS, provided that the requirements of economic activity and analogous taxation are met.

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