Application in the Canary Islands of the deductions of articles 35 and 36 LIS
Regulations: Art. 94 Law 20/1991, of June 7, 1991, modifying the fiscal aspects of the Fiscal Economic Regime
The application of the deductions of articles 35 and 36 of the LIS with increased percentages to business investments made in the Canary Islands is based on the provisions of article 94 of Law 20/1991, of June 7. Article 94 of Law 20/1991 establishes the application of the general deduction regime of Article 26 of Law 61/1978, of December 27, with increased deduction percentages, provided that the investment is made and remains in the Canary Islands.
However, in the event that this general deduction regime of article 26 of Law 61/1978 is abolished, it was ordered by the transitional provision of Law 19/1994, of July , modifying the Economic and Fiscal Regime of the Canary Islands, that its future application in the Canary Islands would be maintained, as long as an equivalent substitute system is not established, in accordance with the regulations in force at the time of the abolition.
As a consequence of the above, the increased deduction percentages of article 94 of Law 20/1991 only apply to the new deduction system established in Chapter IV of Title VI of the LIS, where it is equivalent to the deductions of article 26 of Law 61/1978. That is, in the deductions of articles 35 and 36. of the LIS.
a. Deduction percentages
In accordance with article 94.1.a) of Law 20/1991, of June 7, 1991, modifying the fiscal aspects of the Economic Fiscal Regime of the Canary Islands (BOE of the 8th), the rates applicable to investments made will be 80% higher than those of the general regime, with a minimum differential of 20 percentage points.
However, there is an exception since in accordance with the provisions of the Thirteenth Additional Provision of Law 19/1994, of July 6, amending the Economic and Tax Regime of the Canary Islands, added, with effect from January 2015, by Royal Decree-Law 15/2014, of December 19, amending the Economic and Tax Regime of the Canary Islands (BOE of the 20) it must be taken into account that the percentage of the deduction for technological innovation activities carried out in the Canary Islands and meet the criteria established in section 2 of article 35 of Law 27/2014, of November , on Corporate Tax, will be 45 percent, without the provisions of article ) of Law 27/2014 being applicable to it. 20/1991, of June 7, modifying the fiscal aspects of the Economic Fiscal Regime of the Canary Islands.
Therefore, the applicable percentages and the deduction base in each of the deductions in articles 35 and 36 of the LIS are:
Types of investment | Percentage | Deduction base | |
---|---|---|---|
Deduction for R&D activities (art. 35.1 LIS) | 45 percent | R&D expenditure for the period, up to the average of the previous 2 years | |
75.6 per 100 | R&D expenses for the period, over the average of the previous 2 years | ||
37 per 100 (additional) | Staff costs for qualified R&D researchers | ||
28 per 100 | Investments allocated to R&D (except buildings and land). | ||
Deduction for technological innovation activities (art. 35.2 LIS) | 45 percent | Period expenses in technological innovation. | |
Deduction for investments in Spanish film productions (art. 36.1 LIS) | 54 percent | Up to €1 million | Total cost of production together with costs of obtaining copies, advertising and promotion costs borne by the producer up to a limit of 40% of the cost of production. Take into account the maximum amount established DA14 Law 19/1994: €5.4 million |
45 percent | On the excess of 1 million € | ||
Deduction for foreign film productions in Spain (art. 36.2 LIS) | 54 percent | Up to €1 million | Expenses incurred in Spain directly related to production, provided they are at least €1 million. Take into account the provisions of DA14 Law 19/1994:
|
45 percent | On the excess of 1 million € | ||
Deduction for production of certain live shows (art. 36.3 LIS) | 40 percent | Direct costs Minimum amount of €900,000 in case of production and exhibition of live performances of performing arts and music |
b. Requirements and conditions for the application of deductions
Regarding the requirements and conditions determining the application of these deductions of the LIS (articles 35, 36 of the LIS), their commentary is contained in this Chapter in the section relating to table General regime of deductions for incentives and stimuli for business investment of the Corporate Tax Law.
c. Specific limits on deductions for investments in film productions, audiovisual series and live performances of performing arts and music carried out in the Canary Islands
Without prejudice to the above, with regard to article 36 of the LIS, it must be taken into account that the Fourteenth Additional Provision of Law 19/1994, of July 6, amending the Economic and Fiscal Regime of the Canary Islands, establishes the following specific limits for deductions for investments in cinematographic productions, audiovisual series and live shows of performing arts and music carried out in the Canary Islands:
- Maximum amounts:
- The amount of the deduction for investments in Spanish productions of feature films and audiovisual series of fiction, animation or documentary in article 36.1 of the LIS may not exceed 5.4 million euros when the productions are made in the Canary Islands.
- The amount of the deduction for expenses incurred in Spanish territory for foreign productions of feature films or audiovisual works under article 36.2 of the LIS may not exceed 5.4 million euros when the expenses are incurred in the Canary Islands.
- Minimum amounts:
- A minimum amount of 200,000 euros is established when it comes to expenses incurred in the Canary Islands in the case of execution of post-production or animation services in a foreign production (article 36.2 LIS) and
- Minimum amount of 900,000 euros in the case of production and exhibition of live shows of performing arts and music (article 36.3 LIS).