1. Common rules for deductions

a) Percentages and limits for the application of corporate tax deductions

Regulations: Articles 68.2 and 69.2 Law IRPF

The deduction percentage corresponding to each type of investment and the limits (joint or specific) applicable to the deductions generated are reflected, respectively, in the table within the General Regime and in the table within the Special Deduction Regimes.

These limits will be applied to the quota resulting from reducing the sum of the full, state and regional quotas by the total amount of the deductions for investment in newly or recently created companies and for actions for the protection and dissemination of the Spanish Historical Heritage and the cities, groups and assets declared World Heritage.

b) Deductions not applied in the year due to insufficient quota

Regulations: Art. 39.1 and twenty-fourth transitional provision LIS

Deductions from the exercise itself: According to article 39 of the Corporate Tax Law, the amounts corresponding to the tax period not deducted may be applied in the liquidations of the tax periods that conclude in the next 15 years. However, the amounts corresponding to the deduction for research and development activities and technological innovation of article 35 of the LIS may be applied in the liquidations of the tax periods that conclude in the immediate and successive 18 years.

Deductions from previous years: The deductions provided for in Chapter IV of Title VI of Law 43/1995, of December 27, on Corporation Tax, and in Chapter IV of Title VI of the consolidated text of the Corporation Tax Law, approved by Royal Legislative Decree 4/2004, of March 5, which were pending application at the beginning of the first tax period starting on or after January 1, 2015, may be deducted as of said tax period, with the requirements provided for in their respective applicable regulations prior to that date, within the period and under the conditions established in article 39 of the current Corporation Tax Law.

c) Calculation of deadlines

Regulations: Art. 39.1 LIS

The calculation of the periods for the application of deductions may be deferred until the first fiscal year in which, within the limitation period, positive results are produced in newly created companies and in those that compensate for losses from previous fiscal years by effectively providing new resources, without considering as such the application or capitalization of reserves.

d) Incompatibilities

Regulations: Art. 39.4 LIS

As a general rule, the same investment may not give rise to the application of more than one deduction by the same taxpayer unless expressly provided, nor may it give rise to the application of a deduction by more than one taxpayer.

e) Maintenance of investments

Regulations: Art. 39.5 LIS

Assets affected by deductions must remain in operation for 5 years or 3 years, if they are movable assets, or during their useful life if this is less.

f) Limitation on the right to verify deductions

Regulations: Art. 39.6 LIS

The right of the Administration to initiate the procedure for checking the deductions provided for in this section applied or pending application shall expire 10 years after the day following the end of the period established for submitting the declaration or self-assessment corresponding to the tax period in which the right to its application was generated.

After this period, the taxpayer must prove the deductions that he intends to apply by showing the liquidation or self-assessment and the accounting, with proof of their deposit during the aforementioned period in the Commercial Registry.

g) Other general conditions and requirements of application

The deductions discussed in this section are only applicable to taxpayers who carry out economic activities and determine their net income using the direct estimation method, in either of its two modalities.

However, deductions pending application from investments made in previous years in which the taxpayer was included in the direct estimation method and has met the requirements established for this purpose, may be deducted in this declaration and until the end of the legal period granted for this, even if the taxpayers are covered in this year by the objective estimation method.

Note: taxpayers of IRPF , partners of civil companies to which the income attribution regime has been applied and who acquired the status of taxpayers of Corporate Tax as of January 1, 2016, may continue to apply to their full tax rate the deductions for investment in economic activities provided for in article 68.2 of the IRPF Law that were pending application as of January 1, 2016 under the terms provided for in article 69 of the IRPF Law , provided that the conditions and requirements established in the Corporate Tax Law are met (thirtieth transitional provision of Law IRPF ).