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Practical manual for Income Tax 2020.

By investment in the acquisition of shares and participations as a consequence of agreements to establish companies or increase capital in companies

Regulations: Art. 11 Text Revised legal provisions of the Autonomous Community of Extremadura on taxes transferred by the State, approved by Legislative Decree 1/2018, of April 10.

Amount and maximum limit of the deduction

  • 20 percent of the amounts invested during the 2019 financial year in the acquisition of shares or corporate interests as a result of agreements to establish companies or increase capital in entities that have the nature of Public Limited Company, Limited Liability Company, Labor Public Limited Company, Labor Limited Liability Company or Cooperative Company .
  • The applicable deduction limit will be 4,000 euros per year.

Note: Taxpayers entitled to the deduction must complete the section "Additional information on the regional deduction for investment in the acquisition of shares and equity interests in new or recently created entities" in Annex B.6 of the declaration.

Requirements and other conditions for the application of the deduction

  • That, as a consequence of the participation acquired by the taxpayer, computed together with the participation held in the same entity by his/her spouse or persons related to the taxpayer by reason of kinship , in a direct or collateral line, by consanguinity or affinity up to the third degree included, no more than 40 percent the total share capital of the entity or its voting rights are held during any day of the calendar year.
  • That the acquired shares must kept in the taxpayer's assets for a minimum period of three following the incorporation or expansion and the taxpayer must not exercise executive or management functions in the entity.

  • That the entity from which the shares or interests are acquired meets the following requirements:

    1. That it has its registered office and tax domicile in the Autonomous Community of Extremadura .

    2. That develops a economic activity .

      For these purposes, it will not be considered that an economic activity is carried out when its main activity is the management of movable or immovable assets, in accordance with the provisions of article 4.Eight.Two.a) of Law 19/1991, of June 6, on the Wealth Tax.

    3. That, in the event that the investment made corresponds to the constitution of the entity, from the first fiscal year it has at least one person with a full-time employment contract, or two people with a part-time employment contract provided that the total number of hours in the case of a part-time employment contract is equal to or greater than that established for a person with a full-time employment contract. In any case, workers must be registered with the corresponding Social Security Scheme, and the conditions of the contract must be maintained for at least twenty-four months.

    4. That, in the event that the investment made corresponds to a capital increase of the entity, said entity had been established within the three years prior to the capital increase and the average workforce of the entity during the two fiscal years following the increase increases with respect to the average workforce it had in the previous twelve months by at least one person with the requirements of paragraph 3 above, and said increase is maintained for at least another twenty-four months .

      To calculate the total average workforce of the entity and its increase, the number of people employed will be taken into account, in accordance with the terms established by labour legislation, taking into account the contracted working day in relation to the full working day.

  • The operations in which the deduction is applicable must formalized in a public deed, in which the identity of the investors and the amount of the respective investment must specified.

Loss of the right to the deduction made

Failure to comply with the established requirements and conditions entails the loss of the tax benefit, and the taxpayer must include in the tax return corresponding to the year in which the failure occurred the part of the tax that was not paid as a result of the deduction made, together with the accrued late payment interest.