Intangible fixed assets

What it means

Intangible fixed assets are assets without physical substance and a useful life above one year: software, software licences, trademarks, know-how or capitalised development costs.

They do not include a self-built brand, a customer list or the reputation of the firm. Goodwill arises only on buying a business or a stake, never from revaluing your own name on the balance sheet.

The line also has to be drawn inside an existing asset. Extending software with new functions can be a capital improvement that raises its cost and lengthens amortisation, while routine maintenance, updates and bug fixes remain an expense of the period.

How it works in practice

Intangibles are amortised under the depreciation plan in line with their useful life. Tax amortisation follows the accounting figure here, unlike tangible assets with their statutory depreciation groups.

The line between an asset and a service matters: an annual subscription to a cloud tool is an expense of the period, while a purchased perpetual licence is an asset. The contract decides, not the wording on the invoice.

When a client orders a website or an online store from an agency, we look at what is really being bought. If the company receives the source code and the right to use and modify it, it is usually an intangible asset; if it pays to run a solution on someone else’s platform, it is a service expensed as it goes.

What to watch out for

Companies capitalise in-house software development without records showing what exactly was built and from when it was usable. Without them an audit refuses the capitalisation, pushes the amount back into that year and recomputes the tax.

A licence bought from a foreign author or company may be subject to withholding tax, because royalties count as a non-resident’s income from a Slovak source. Missing this at payment means paying the tax out of your own funds, even though the supplier already got the full amount.