"NEWS October 14, 2016-Irap and leasing"

Posted by on Oct 14, 2016

In accordance with article 102, paragraph 7, of the tax code, the tax deduction of financial lease varies according to the type of asset (property, mobile or motor vehicles to deduct limited). Particularly for contracts concluded by 1 January 2014:

  • movable property (except for vehicles other than those used exclusively as capital goods in the performance of the enterprise, used for public use or licensed promiscuous employees), it goes from 2/3 of the depreciation period 1/2 "table" of this period;
  • real estate firms, it goes from 2/3 of the depreciation period "table", with a minimum of 11 years and a maximum of 18 years, a period "fixed" 12 years.

Nothing has changed, however, with respect to the deductibility of leasing fees concerning motor vehicles – other than those used as instrumental to the activity of the enterprise or licensed promiscuous employees – who continue to be deductible with the timeframe of the depreciation process. The rules explained, even if directly related to tax IRES/INCOME TAX, also affect system of determining the IRAP tax base. As noted, the IRAP tax base is determined as follows.

For IRES and to INCOME TAX subjects in ordinary accounts which have exercised the option (articles 5 and 5-bis of Legislative Decree 446/1997), applies the principle of "derivation", according to which the taxable amount is the difference between value and cost of production (except some), as resulting from the income statement accounts. The principle of derivation in Word is, however, departed:

  • for all contracts of leasing, for the need to resume to taxation (tax growth outright) the share interests;
  • real estate lease contracts, by virtue of the recovery to tax the proportion attributable to the ground below.

For such subjects, in fact, in accordance with article 5, paragraph 3, of Legislative Decree No. # 446/1997, financial leases are deductible to the amount allocated under heading b. 8 of the income statement, except for the share of the interest expenses relating thereto, inferred from the contract: for IRAP purposes, then, no relief take the limits of deductibility of the income tax (circular No. 17/s/2013).  Furthermore, as an exception to that general principle, according to the internal revenue service (circular No. 38//2010), in real estate leasing must be considered non-deductible share of Canon refers to the terrain park (ex Article 36, subparagraph 7 and 7 bis of DL 223/2006).

It is, however, a solution that is not shared in doctrine: according to the fact, by virtue of Executive mentioned the principle of derivation and according to proper accounting standards, the real estate lease payments (adjusted of course of interest) should be deductible to the amount allocated, without taking account of the limits lump sums as referred to in article 36, paragraph 7 and 7 bis of DL 223/2006 (circular Assonime 31.7.2009 n. 34).

For partnerships and individual entrepreneurs, however, the determination of costs deductible does not take place in accordance with the principle of differentiation, but taking the comprehensive income as well as turn out according to the rules of the tax code (circular No. 60/E/2008).  It follows that, in addition to the increase (final) to be made to the interest, it is necessary to carry out the temporary change also on share capital if the actual duration of the contract is less than the minimum tax.

Finally, it should be recalled that, for the purposes of IRAP, the rules for calculating the non-deductible interest are common to all businesses. In this regard, the practice of the Inland Revenue has specified that the amount of interest expense can be determined, for subjects no Ias adopter, as determined by DM 24.4.1998 (circular No. 17/s/2013). According to this Decree, the proportion of the lease specifically referable to interest expense is determined according to the following:

"Standards of competence – (cost to society grantor × n. days tax year/n. day lease agreement) ".

In this case, however, the denominator of the formula you need to indicate the days of duration of the contract and not those of the possibly different duration (circular No. 17/s/2013).

by Sandro Cerato