Amortization suspension – the extension for 2021 and 2022 is confirmed

Law no. 25/2022, which converted Legislative Decree no. 4/2022, extended the option to suspend the amortization of tangible and intangible fixed assets for fiscal years 2021 and 2022.

The principal technical aspects may be summarized as follows:

  • subjective scope: the option is granted only to entities that do not adopt international accounting standards for the preparation of their financial statements;
  • temporal scope: the possibility of suspending amortization may be applied in 2021 and 2022 financial statements both by companies that have already utilized it in 2020 and by those that have not benefited from it;
  • objective scope: the suspension concerns the amortization of tangible and intangible fixed assets. It could be total or partial and may be carried out with reference to specific categories of assets or individual depreciable assets.

The new regulatory text no longer reports the indication that the portion of amortization not carried out should be charged to the Income Statement of the following year, thereby extending the original amortization schedule for the asset by one year.

It is now up to the management to verify whether the useful life of the asset can be extended to keep flat amortization rates, or whether the suspended charge should be added to the residual amortization as the useful life of the asset has not changed.

In any case, the suspension of amortization entails that:

  • when the profit for the period is allocated, an amount equal to the suspended amortization is allocated to the unavailable reserve;
  • in the Explanatory Notes, information must be provided regarding the reasons for the waiver, the unavailable reserve and the impact of the waiver in economic and equity situation.

From a tax standpoint, the taxpayer has the possibility (and not the obligation) to deduct – for IRES and IRAP purposes – the suspended amortization and, if he decides to exercise this option, he is obliged to record the corresponding deferred taxation.