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V3541-15 17 November 2015 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · inmovilizado material

Loss from the accounting write-off of works carried out in a rented premises may be deductible

A company enquired whether it could deduct the cost of renovation works that the tenant demolished after leasing the premises. The DGT ruled that if the write-off of said works is accounting-compliant, the resulting loss shall be included in the taxable base.

The question raised

The consulting company, as the owner of the premises, asks whether it can deduct in the fiscal year in which the tenant company has demolished the work, the amount disbursed for the execution of said works.

The DGT's ruling

As there is no specific regulation in Corporate Income Tax, commercial law applies. If the works were incorporated into the asset as an increase in value, they shall be derecognized when no future benefits are expected to be derived from them. The difference between the carrying amount and the amount obtained from the derecognition shall determine the loss to be recognized in the corresponding fiscal year.

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