Case study: Tax depreciation analysis of a data centre in France

  • Project – Data centre construction tax depreciation analysis

  • Total expenditure – €90m

  • Total expenditure accelerated – £46.8m

A multinational data centre client engaged us to prepare a tax depreciation analysis on the purchase of a former factory building in Paris and the subsequent construction of a new data centre. The total expenditure equated to approximately €90m. The generally accepted method of depreciation in France for a building of this type would normally be 4% per annum on a straight-line basis.

We worked closely with the main contractor to collate the relevant construction cost information and fixed asset register. We also carried out a site survey to establish the exact nature and expected ‘useful life’ of the assets installed.

The application of our surveying skills enabled us to identify each element of the property that attracted an accelerated depreciation rate.  This allowed us to apply a variety of depreciation rates from 5% to 20% thereby significantly accelerating the tax relief available, as each category of expenditure was written down at a much faster rate.

The completed analysis and supporting report was submitted to the French tax authorities and resulted in £5m of additional tax relief compared to if the client had applied the normal 4% depreciation rate.

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