"NEWS November 7, 2016-Super amortization always attached to the tax rate"

Posted by on Nov 7, 2016


Euroconference News

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Super depreciation deduction is always equal to 40% of the depreciation cost calculated based on the tabular rates December 31, 1988 Decree. This is one of the aspects confirmed by the IRS in circular 23/E/2016 that were provided several clarifications concerning the functioning of the facility provided for in the law of stability 2016 deadline for application is expected at the upcoming December 31, 2016 (except where the extension contained in the draft of the law of December 31, 2017 2017 to be finally confirmed stability).

In its circular 23/2016 the Inland Revenue has confirmed, first, that for property acquired in the properties under concession no impact in any way on the depreciation process statements (article 2426 cod. CIV. and OIC 16), whose rules require of "smearing" the imputation of depreciable asset cost over its useful life. Therefore, the most allowable deduction does not pass in any way in the income statement of the company, but takes the form of a decrease in the framework model RF Only. The autonomy of the higher deduction for tax purposes should not – in principle – also take into account amortization expensed, which does not necessarily have to correspond to the proportion deductible from business income (the latter counted based on the depreciation rates indicated in the Decree December 31, 1988).

The fact that the deduction of "maxi" amortization takes place only via accounting involves, for example, that at the time of supply of goods higher depreciation deduction does not in any way impact on the determination of the capital gain or capital loss, the extent of which remains equal to the difference between the sale price and fiscal cost of the asset.

Returning to the working mechanism of subsidy, which translates into a decrease under 40% of the Only model RF equivalent to depreciation tax deductible (or the share capital of the Canon for property acquired in lease), you can distinguish three cases:

  • the first is the "classic" in which the depreciation allocated to profit or loss coincides with deductible, in which case the tax advantage is enjoyed by operating a decrease equal to 40% of the unique model deductible (equivalent to that recorded in the profit and loss account) without any reflection on the latent taxation because it is definitive difference not susceptible of recovery;
  • the second situation occurs where the depreciation allocated to profit or loss is greater than the proportion deductible, resulting in a twofold variation in single model: the first an increase equal to the difference between statutory depreciation and amortization decreased, and the second deductible equal to 40% non-deductible depreciation and commensurate to the share recorded in the income statement (for depreciation resumed early taxation taxation must be registered as it is variation temporary recovery at the end of the statutory depreciation object);
  • the third, and is subject to clarification by the Agency occurs when the depreciation allocated to profit or loss is less than the deductible proportion (acquisition cost equal to 100 with 10% depreciation rate table equal to the allocated profit equal to 8). In that case, it being understood that in application of the principle of derivation depreciation defendant in the income statement is also deductible (8 in the example), facilitation of super amortization is fruita a decrease in maximum 40% of sole pattern equal to the deductible (4 equal to 40% of 10), and then due to amortization tables whose Decree December 31, 1988.

The conclusion, in this writer's opinion, is consistent with the regulation which connects the facility not directly to depreciation but as an increase in the cost of acquisition of the asset and should be interpreted as concession arrangement entirely detached from civil behavior, determined in each case in an amount equal to 40% of the depreciation tax deductible following the tabular rates referred to in the said Decree December 31, 1988.

by Sandro Cerato