B Law & Tax
11 September 2023

Tax Advisor: Corporate Income Tax Incentives and how to access them

Small companies can access corporate tax incentives, which means that those companies with a turnover of less than 10 million euros in the previous year can enjoy these benefits.

These companies can take advantage of benefits such as free depreciation for investments in tangible fixed assets and real estate investments that generate employment. To qualify for this type of depreciation, new tangible fixed assets and real estate investments must be used for economic activities. These can be depreciated freely during the first 24 months after they are put into operation. In order to obtain this benefit, it is necessary that, during those 24 months, the total average workforce of the company increases compared to the average of the previous 12 months and that this increase is maintained for an additional 24 months.

In addition, these companies may apply accelerated depreciation for new tangible fixed assets, real estate investments and intangible assets intended for economic activities, provided that they are available during the tax period in which the company is considered to be of reduced size.

Regarding the deduction of losses, in cases involving intangible assets considered to have an indefinite useful life and goodwill, a deduction of 150% of the resulting value is allowed when applying the maximum tax depreciation of 5%, in accordance with the interpretation provided by the General Directorate of Taxes.

In addition, companies have the possibility of deducting losses arising from the impairment of receivables due to possible defaults by debtors. For this to be deductible, the entity must be classified as small-sized during the tax period in which the loss deduction is intended to be applied. It is important to note that new losses will not be deductible from a tax point of view until the accumulated balance of the overall impairment loss recorded in previous years has been fully utilized. This incentive involves the reduction of the taxable income for the year by a maximum of 10% of its value, with a quantitative limit of up to 1,000,000 euros.

B Law & Tax International Tax & Legal Advisors.

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