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Practical manual for Income Tax 2020.

Joint limit of deductions of articles 35, 36 and 38 LIS in the Canary Islands

  • General Joint Limit: 60 percent or 90 percent

    According to article 94.1.b) of Law 20/1991, of June 7, 1991, the joint limit on the quota will always be 80% higher than that set in the general regime, with a minimum differential of 35 percentage points.

    Therefore, the joint limits of article 39.1 LIS are raised to 60 percent or 90 percent.

    Consequently, the deductions for investments of articles 35, 36 and 38 LIS , applied in the Canary Islands in the tax period, may not jointly exceed 60% of the quota resulting from reducing the sum of the full, state and regional quotas (boxes [0545] and [0546] of the declaration), in the total amount of the deductions for investment in habitual housing (in the case of taxpayers to whom the transitional regime of this deduction is applicable), for investment in new or recently created companies, provided for in article 68.1 of the Law of IRPF , and for actions for the protection and dissemination of the Spanish Historical Heritage and the World Heritage (∑ boxes [0547] and [0548] ; less ∑ boxes [0549]; [0550] and [0551], respectively). However, it will be raised to 90% when the amount of the deductions under Articles 35 and 36 exceeds 10% of the aforementioned rate.

  • Joint boundary for the islands of La Palma, La Gomera and El Hierro: 70 percent or 100 percent

    However, as of 2019 for the islands of La Palma, La Gomera and El Hierro, the minimum limit of 80% will be increased to 100% and the minimum differential will increase to 45 percentage points when the Community regulations on state aid so permit and the investments contemplated in Law 2/2016, of 27 September and other laws on measures to regulate the economic activity of these islands in accordance with the provisions of article 1.41 of Law 8/2018, of 5 November, which modifies Law 19/1994, of 6 July, amending the Economic and Fiscal Regime of the Canary Islands (BOE of 6]. Consequently, in these cases, for the islands of La Palma, La Gomera and El Hierro the joint limits (60% or 90%) are raised, respectively, to 70% and 100% .

    The application of the 90% limit (100% for the islands of La Palma, La Gomera and El Hierro) is subject to compliance with the requirements for the 50% limit mentioned when discussing the joint limit in the general deduction regime for incentives and stimuli for business investment in the Corporate Tax Law of this Chapter.

    The application of the limits provided for the islands of La Palma, La Gomera and El Hierro in those cases in which the taxpayer also generates deductions in other territories of the Canary Islands must simultaneously attend to the following rules:

    1. Deductions generated on the islands of La Palma, La Gomera and El Hierro must respect their own enhanced limit (70/100 percent). Likewise, the deductions generated in the rest of the Canary Islands must also respect their own improved limit (60/90 percent).
    2. In the event that there are both deductions on the three islands mentioned (La Palma, La Gomera and El Hierro) and on the rest of the Canary Islands, the maximum limit for both types of deductions will be the higher one, that is, the improved limit for the three islands (70/100 percent).
    3. In the event that deductions apply on the three islands mentioned and on the rest of the Canary Islands, the latter will not be able to benefit from the increased limit of the three islands.

  • Application of the joint limit

    Finally, note that this joint limit on the quota is independent of that corresponding to investments covered by the General Regime of deductions of the LIS and the Regimes of support for events of exceptional public interest included in Annex A.3) of the declaration.