capital expenditure, capital expenditure, capex (contraction of English capital expenditure), CAPEX, or paid-up capital[1]​ are capital investments that create profits. A CAPEX is executed when a business invests in the purchase of a fixed asset or to add value to an existing asset with a useful life that extends beyond the taxable year. Capex are used by a company to acquire or improve fixed assets such as equipment, properties or industrial buildings. In accounting, CAPEX is included in an asset account (capitalization) by increasing the asset's base value (the cost or value of an asset adjusted for tax purposes).

For tax purposes, CAPEX are costs that cannot be deducted in the year in which they are incurred and must be capitalized. The general rule is that, if the property acquired has a useful life longer than the taxable year, the cost must be capitalized. CAPEX-related disbursements are amortized or depreciated over the useful life of the asset in question. As explained above, CAPEX creates or increases the basis of the asset or property, which, once adjusted, will determine the tax basis in the event of a sale or transfer.

They are generally done to:

A common question is when certain costs should be capitalized and when expensed. Costs that are expenses simply appear on the income statement or profit and loss report" as costs for a particular month; costs that will be capitalized, however, appear as amortization over several years.