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Depreciation write-offs and grant received after acquisition of a fixed asset |
Following art. 16 sec. 1 pt 48 of the CIT Act, which states that
depreciation write-offs covered by grants actually received cannot be classified as a cost of earning revenue, the tax office has confirmed
that, starting in the month the grant is received, the proportion of
write-offs disallowed as a deductible cost will be established by
reference to the ratio the grant bears to the fixed asset’s initial
value.
Receipt of subsidy does not justify an adjustment of deprecation rates
or the fixed asset’s initial value. Additionally the office stated that tax deductible costs should be decreased in the month a
grant is received by the portion of write-offs attributable to the
grant made in earlier months.
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To summarise, if you have received a grant amounting to 40% of a fixed
asset’s initial value, first – in the month the grant is received – you
must decrease your tax-deductible costs by 40% of the depreciation
write-offs made in earlier months, and then (starting in the month the
grant is received) you must include only 60% of the write-offs as tax
deductible costs. |
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