Purchase application software: what does under the statutory and tax aspects
Application
A corporation is planning to buy a license to use a management software specially developed by a leading company in the sector on the basis of the technical specifications provided. The company would like to know the possible implications civil and tax attributable to the mentioned operation
Reply
The treatment applicable to the so-called software "application" (made in order to meet the specific needs of the user) does not have a unitary character, as the Accounting Standard no. 24 makes a distinction between the software purchased outright and those sold under license.
The cost of software purchased outright are recorded in the balance sheet as intangible assets under BI3 the Balance Sheet. For statutory purposes the same will be amortized on a straight line basis over the estimated useful life if determinable, otherwise in three years. For tax purposes, these costs are deductible on annual limit not exceeding 50% (the cost can be amortized, so even in three years).
With regard, however, the software "application" acquired under license (as it should happen in this case) it is necessary to distinguish between those purchased:
1. indefinitely whose costs should be capitalized in accordance with the rules laid down for the application software acquired title to the property and described above;
2. given time. If the contract provides for the periodic payment of a fee related costs are expensed as incurred (ie expensed on an accrual basis). If the contract provides, however, the payment of a "one-off" paid beginning to assert throughout the license period, the corresponding costs are capitalized and recognized in the balance sheet as BI4. For the purposes of accounting and tax these costs will be amortized on a straight-line basis over the period of the license.
In essence, in this case the costs related to software licenses will be capitalized if the software was purchased indefinite or fixed-term payment of a fee to apply for the entire license period. In contrast, the same will be recognized in the income statement as operating costs if the software was purchased for a fixed period the contract provides for the periodic payment of a fee.
06/04/2011
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Translated via software
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Source:
Italian version of ReteArchitetti.it