Difference between improvement works and conservation works

Dołączył: 10 Mar 2024 Posty: 1

It is essential to distinguish between improvement works and conservation works. Not only to request building permits, but also to know if an operation is subject to amortization or is considered an expense for the year. So that it can be understood clearly, we are going to give the example of a company that is dedicated to leasing homes and commercial premises. This company is carrying out work on one of the floors, in which an architect has intervened who has requested permission for small works and the VAT to be charged, according to the contract signed by the contractor, will be %.

In this situation, it is necessary to know what Buy Bulk SMS Service parameters are taken into account to consider it a work of improvement, and, therefore, be subject to amortization, or if, on the contrary, it is considered a work of repair and conservation, and then consider it as an expense. . Law / on Corporate Tax, hereinafter LIS, does not contain any specific rule that allows discriminating the nature of the various works that can be undertaken on a property.

However, article of that law establishes that “in the direct estimation method, the tax base will be calculated, correcting, through the application of the precepts established in this law, the accounting result determined in accordance with the rules provided in the law. Commercial Code, in the other laws related to said determination and in the provisions issued in development of the aforementioned regulations.

Therefore, the application of the provisions of commercial regulations will proceed, in this case the General Accounting Plan, hereinafter PGC, approved by Royal Decree / The nd registration and valuation rule, of the second part of the PGC, refers to the expenses that constitute a greater acquisition value of the assets included in the tangible fixed assets: According to this standard, “the purchase price includes, in addition to the amount invoiced by the seller after deducting any discount or reduction in the price, all additional and directly related expenses that occur until it is put into operating condition, including the location on the site and any other conditions necessary for it to operate as intended; among others: expenses for grading and demolition, transportation, customs duties, insurance, installation, assembly and other similar expenses.

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