Work highlight

International tax depreciation and the benefits of undertaking a detailed cost segregation analysis

Insight shared by:

Gateley Capitus

One of Europe’s leading developers of logistics and industrial properties built a large distribution warehouse facility in Spain, where business property is commonly written-down for tax relief on a straight-line basis at 3% per annum. But we were able to accelerate the tax relief to 6.43% a year by using our specialist surveying and tax skills to prepare a cost segregation analysis that categorised the client’s expenditure into various asset classes. This more than doubled the annual tax relief. 

What is an international tax depreciation analysis?

In many international tax jurisdictions, following International Accounting Standards, it is possible to depreciate component parts of a property, such as air conditioning plants, lifts or electrical equipment more quickly than the structure and shell of the building. 

How did we help?

The client:

Overseas developer and investor

The works:

The works comprised the development of a large high-specification logistics centre in Spain, with office and welfare facilities. Externally there was a secure yard with access to the building through dock levellers and automatic roller shutter doors.

The problem:

Tax depreciation specialists do not exist in many jurisdictions which often means that the entire cost of the property is depreciated at a single low composite rate overlooking significant levels of enhanced tax relief. In this example, the client’s overseas tax advisors intended to depreciate the whole property at a single rate of 3% per annum.

Value of international tax depreciation analysis and cost segregation:

Using a specialist methodology and combination of property costing, valuation and accountancy skills we analysed the total development expenditure of nearly €30m and segregated it into its component elements, writing-off each for tax purposes at the optimum rate available. This accelerated the annual tax saving from around €200k to almost €500k.

In conclusion:

Analysis and coordination by an experienced tax depreciation specialist allows you to optimise the tax relief claim by segregating property expenditure into its components and writing-off each for tax purposes at the optimum rate available in that particular jurisdiction.

What you need to know

If you are an investor buying, developing, or refurbishing a commercial property overseas, where the income is taxable in that foreign jurisdiction, our international tax depreciation and cost segregation services can maximise and accelerate the tax relief available to:

  • Reduce current and future tax liabilities
  • Improve cash flow
  • Free up capital for further investment

Interested in finding out more about international tax depreciation?

We specialise in international tax depreciation cost segregation analysis and are happy to undertake a no-obligation review of any development to give an assessment of the relief available. Visit our web page to get in touch.

Got a question? Get in touch.