Extension of suspension of amortization and depreciation for the financial years 2021-2022
The Law converting Legislative Decree no. 4/2022 (the so-called “Sostegni-ter”), once again amends the rules governing the suspension of depreciation pursuant to art. 60, paragraph 7-bis et seq. of Legislative Decree no. 104/2020 (converted into Law no. 126/2020), providing for its application with reference to the financial statements for 2021 and 2022.
The rule was originally introduced in October 2020, when Law Decree no. 104/2020 was converted into law, as part of the measures aimed at supporting businesses and relaunching the economy because of the COVID-19 epidemic, and allowed parties that do not adopt international accounting standards to suspend the depreciation of tangible and intangible fixed assets in the financial year underway as of August 15, 2020 (the date on which Law Decree no. 104/2020 came into force) and, therefore, for parties whose financial year coincides with the solar year, in relation to the 2020 financial statements.
In the first instance, the rule was extended to the financial year following the one in progress as of August 15, 2020 and, therefore, to the 2021 financial year, by the 2021 Budget Law (Law 234/2021). Since its introduction, the extension has given rise to significant doubts regarding interpretation, as the exemption regime was applicable in 2021 only to entities that had carried out 100% annual amortization of tangible and intangible assets in 2020.
In response to these problems, art. 3, paragraph 5-quinquiesdecies of Legislative Decree no. 228/2021 (the so-called “Thousand-Extensions Decree”), included during conversion into Law no. 15/2022, has once again replaced the last sentence of art. 60, paragraph 7-bis, of Legislative Decree no. 104/2020, extending the exemption to the financial year after the one in progress as of August 15, 2020, without setting any restrictions regarding its scope of application.
Lastly, art. 5-bis of Legislative Decree no. 4/2022, converted into Law no. 25/2022 (so-called “Support-ter”), in force as of March 29, 2022, extended the exemption regime to the financial years in progress as of December 31, 2021 and December 31, 2022.
Converted Law Decree no. 4/2022 establishes that entities that do not adopt international accounting standards may not carry out up to 100% annual amortization of the cost of tangible and intangible fixed assets in the financial years in progress as of December 31, 2021 and December 31, 2022 (for “solar” entities, in the financial statements for 2021 and 2022), maintaining their book value.
However, the application methods of the derogating regulation remain unchanged, with the result that the obligation to allocate profits corresponding to the portion of depreciation not carried out to a non-distributable reserve and specific disclosure requirements in the Notes to the financial statements continue to apply.
From a tax point of view, the failure to record the depreciation in the financial statements does not affect its deductibility, which is permitted (this is an option), both for IRES and IRAP purposes, regardless of whether it is recorded in the Income Statement.
However, the suspension of amortization and depreciation for the financial years 2021 and 2022 could affect the ability of the financial statements to provide a true and fair view of the Company’s financial position and results of operations for the year, given that from 2021 it is no longer possible to make exceptions to the going concern provisions when preparing the financial statements. 2423-bis paragraph 1 of the Italian Civil Code and the document OIC 11, must assess the company’s ability to meet its obligations, over a period of at least twelve months from the date of the financial statements,
LDP remains available for any further clarification.