As time progresses, it is inevitable that fixed assets or stock will emerge that, due to technological evolution, breakdown, or wear and tear, can no longer be used or sold.
In this context, in order to avoid the accumulation of obsolete assets and to reflect the appropriate balances in the balance sheet, it is suggested that they be derecognized.
On the other hand, the Tax Authority may presume the sale, and consequently assess VAT, in cases where the goods in the accounting records do not physically exist in the company.
Thus, when any possibility of sale is exhausted, the company can follow two paths: slaughter or donation.
Slaughter
The deterioration, obsolescence of goods that originate their physical slaughter does not imply the assessment of VAT, as long as it is duly supported by irrefutable evidence that allows the inspection agents to properly control the effective slaughter, namely the delivery note issued by the entity collecting the goods, accompanied by the note issued in the SILIAMB platform and the internal document proving the counting and identification of the goods, in case they are sent to the scrap yard or landfill.
In the case of destruction, although it is not mandatory, it is suggested to proceed with the prior communication of these facts, indicating the date and time, to the Tax Office, so that the inspection agents can, if they so wish, carry out the necessary control in person. Alternatively, the company must prepare and keep a record of the destruction or destruction of the destroyed goods, signed by people outside or outside the company who witnessed the act.
If the slaughter operation gives rise to costs, these will be accepted for tax purposes, provided that the aforementioned evidence is produced.
Donation
Like slaughter, donation must also be properly supported by documentary evidence. On the company’s side, we suggest issuing an invoice with the sales value at zero or with a 100% discount. On the part of the beneficiary entity, it is mandatory to issue a declaration or receipt, which allows the correct fiscal framework of the operation.
First of all, with regard to VAT, donations of goods made to the State, to IPSS and non-profit non-governmental organizations, for subsequent distribution to people in need, are exempt from VAT. In the remaining situations, when the unit value of the goods (acquisition cost) does not exceed 50.00€ and the total annual value of donations is less than 5 per thousand of turnover, the VAT exemption also applies, however, if any of these limits is exceeded, the respective VAT assessment must be made.
In terms of “IRC”, donations made to IPSS, foundations, state entities, entities with public utility status in the social or sports areas, EPE hospital entities or beneficiary entities within the scope of scientific or cultural patronage, are considered a full tax cost, with the possibility of applying a surcharge that may vary between 120% and 150%, depending on the destination of the donated goods.
However, it should be noted that if the supporting documents do not follow the formal rules provided for in the legislation or the donations have as destination entities not recognized under the terms of the Statute of Fiscal Benefits, these cannot be recognized as tax costs.
Be sure to consult the legislation or your Accountant.
