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Practical manual for Income Tax 2020.

By investment in agricultural companies and agricultural cooperative societies or community exploitation of the land

Regulations: Art. 5. Fifteen Text Consolidated version of the legal provisions of the Autonomous Community of Galicia on taxes transferred by the State, approved by Legislative Decree 1/2011, of July 28.

Amounts and maximum limit of deduction

  • 20 percent of the amounts invested in the year 2020 in the acquisition of share capital as a result of agreements to establish companies or increase capital in agricultural companies and agricultural cooperative societies or for community exploitation of land .
  • With respect to the same entities , 20 percent of the amounts lent during the fiscal year, as well as the amounts personally guaranteed by the taxpayer , provided that the loan is granted or the guarantee is constituted in the fiscal year in which the company is incorporated or its capital is increased .
  • The maximum joint limit of the deduction is 20,000 euros, regardless of the number of members of the family unit who satisfy the amounts that entitle them to it.

Requirements and other conditions for the application of the deduction

  • The taxpayer's participation, computed together with that of the spouse or of persons related by reason of kinship, in a direct or collateral line, by consanguinity or affinity up to the third degree included, may not exceed 40% of the share capital of the company that is the object of the investment , or of its voting rights, at any time and during the three years following its incorporation or expansion. In the case of a loan or guarantee, the taxpayer's participation in the capital will not be necessary, but if it exists, it cannot exceed 40%, with the same limits as above.

    The maximum limit on participation in the share capital shall not apply in the case of worker-owned companies or cooperatives composed of only two partners, as long as this circumstance is maintained.

  • The entity in which the investment, loan or guarantee must be materialized must meet the following requirements:

    1. It must have its registered office and tax domicile in Galicia and maintain it for the three years following its incorporation or expansion.

    2. It must have as its exclusive corporate purpose the agricultural activity .

      The term "agricultural activity" will be the one defined in Law 19/1995, of July 4, on the modernization of agricultural holdings.

      The agricultural holding must be registered in the Register of Agricultural Holdings of Galicia.

  • The operations in which the deduction is applicable must formalized in a public deed, in which the identity of the taxpayers who intend to apply this deduction and the amount of the respective operation must specified.

  • The acquired shares must remain in the taxpayer's assets for minimum period of three years the incorporation or expansion.

    In the case of loans , these must refer to financing operations with a term greater than or equal to five years , without being able to amortize an amount greater than 20% per year of the amount of the principal loaned.

    In the case of guarantees , these will extend to the entire duration of the guaranteed operation , and may not be less than five years .

Incompatibility

This deduction is incompatible with the deductions “For investment in the acquisition of shares or social participations in new or recently created entities”, “For investment in the acquisition of shares or social participations in new or recently created entities and their financing” and “For investment in shares of entities listed in the segment of expanding companies in the alternative stock market” included in numbers nine, ten and eleven of article 5 of Legislative Decree 1/2011.

The incompatibility refers to the same investment, that is, only one deduction may be applied to each investment (at the taxpayer's discretion), but nothing prevents the corresponding deduction from being applied to each of them if several different investments are made.

Note: Taxpayers entitled to this deduction must complete the section "Additional information on the Galician regional deduction for investment in agricultural companies and agricultural cooperative societies or community land exploitation" in Annex B.7) of the declaration in which, in addition to the amount of the investment entitled to deduction, the NIF of the entity in which the investment is made, the loan is granted or the guarantee is constituted and, if applicable, that of the second entity, indicating the total amount of the deduction in the corresponding box.