Write-offs

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In Portugal, depreciation can be made in two ways:

• Accounting: Depreciation that follows international accounting principles (IFRS). Accounting currency is defined as currency 1 in the system.
• Tax: Depreciation that follows tables of homogeneous group published by the government. Tax currency is defined by the parameter admin-IN-316fd0ae-5f3c-4db9-ac26-cbdf4ff8a7d1-1507579308097-cb732d20-ac94-4e54-b4ca-f3cf1959167e.

Thus, monthly calculation of depreciation can be made by:

• Accumulated lost rate (control in tax currency)

Lost rate is when a rate lower than the half of the official rate established by the government is used in tax currency. Calculation of lost rate is the difference between the official half and the rate used by the company.

Example:

Official rate established by the government: 30%

Lower rate used by the company:      10%

Government control (lost rate):       5% (30/2 – 10 = 5)  

The asset tax depreciation is not used in calculation in the following situations:

Accrued values of asset depreciation: When value of accrued tax depreciation plus value of accumulated lost rate reaches the original value of the asset.

Maximum value of asset depreciation defined by the customer: When value of accrued tax depreciation plus value of accumulated lost rate reaches the depreciation maximum value.

Depreciation time: When asset depreciation time is longer than the twice the time established by the government.

• Capital Gain and Loss

Used in asset lien, that is, when it happens due to sales or any other reason, value of Capital Gain and Loss is calculated.

Example:

Accounting Capital Gain:

Sales value - (value of asset acquisition –(accrued accounting depreciation * ratio)

Tax Capital Gain:

Sales value - (value of asset acquisition – (accrued accounting depreciation - accrued tax depreciation) *ratio)

c8221504-d397-4202-9f47-47edeb516fadNote:

Devaluation ratio is the value determined by the Portuguese government.
• Reduced-value Assets (Art32)

For assets with reduced value (values up to 1000 Euros), the field IRC Article 32 (N1_ART32) must be entered with S in order to make the calculation.

Calculation of depreciation of reduced-value assets: 100 * (13 – Acquisition month)

c8221504-d397-4202-9f47-47edeb516fadImportant:

• Asset write-off must be total. Partial write-offs are not allowed. Partial write-off is only allowed in revaluation cases (09-Revaluation).
• To cancel an undue write-off, values of Capital Gain and Loss must zeroed. A write-off cannot be canceled after monthly calculation of depreciation. If necessary, calculation of depreciation and then write-off must be canceled.