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Practical manual for Income Tax 2021.

Deductions from the full fee

Deductions for incentives and stimuli to business investment in economic activities in direct estimation

1. General regime and special regimes of deductions for incentives and stimuli to business investment of the Corporate Income Tax Law

  • Support programs for events of exceptional public interest. New deductions are included in the business sector linked to events of exceptional public interest approved in Law 11/2020, of December 30, on the General State Budget for the year 2021 ( BOE of 31).

  • Deductions for incentives and stimuli for business investment under the Corporate Income Tax Law.

    The deductions in article 36 of the LIS are modified to include the following new features:

    1. In general:

      The Thirty-first Final Provision.Two of Law 11/2020, of December 30, on the General State Budget for the year 2021 ( BOE of 31), modified article 39 of the LIS to allow, from January 1, 2021, that deductions can be applied for investments in Spanish film productions and audiovisual series (art. 36.1 LIS ) and for the production of certain live shows of performing and musical arts (art. 36.3 LIS ), in addition to the taxpayers who carry out the productions (producers), the taxpayers, businessmen or professionals who participate in the financing of these (investors), when the latter contribute amounts as financing, to cover all or part of the costs of production without acquiring intellectual property rights or other rights regarding the results thereof, the ownership of which must in all cases belong to the producer. These contributions can be made at any stage of production until the nationality certificate is obtained.

      In order for the investor to be eligible for this deduction, it is necessary that he/she signs a financing contract with the producer and that both parties notify the tax authorities of this circumstance before the end of the tax period in which the deduction is generated, providing both the signed financing contract and the certifications of compliance with the requirements set out in article 36.1 or 36.3 of the LIS for the application of the deduction.

    2. Joint limits

      The thirty-first Final Provision. Two of Law 11/2020, of December 30, on the General State Budget for the year 2021 ( BOE of the 31st), modified article 39.1 of the LIS to establish that the increased limit of 50 percent is applied taking into account not only the amount of the deductions provided for in article 35 (deductions for research and development activities and technological innovation) but also the amount of those in article 36 of the LIS (deductions for investments in film productions, audiovisual series and live shows of performing and musical arts).

    3. Deduction for foreign film productions in Spain (art. 36.2 LIS )

      Article 1.3 of Law 11/2021, of July 9, on measures to prevent and combat tax fraud ( BOE of 10) has modified article 36.2 of the LIS to introduce the requirements that must be met by producers who are in charge of the execution of foreign productions of feature films or audiovisual works that allow the creation of a physical medium prior to their serial industrial production in order to apply this deduction.

2. Special regime for business investments in the Canary Islands

The first Final Provision of Law 14/2021, of October 11 ( BOE of the 12th), modified the wording of the Fourteenth Additional Provision of Law 19/1994, of July 6, modifying the Economic and Fiscal Regime of the Canary Islands, to establish that the amount of all deductions in article 36 of the LIS may not be higher than the result of increasing by 80% the maximum amount referred to in said article when it comes to productions or expenses made in the Canary Islands, given that the Fourteenth Additional Provision of Law 19/1991, first paragraph, with regard to 36.1 of the LIS refers to "increasing by 80% the maximum amount referred to in said article when it comes to productions made in the Canary Islands".

As a consequence of the above:

  • The amount of the deduction in article 36.1 of the LIS may not exceed 18 million euros when it concerns productions made in the Canary Islands.

  • The amount of the deduction in article 36.2 of the LIS may not exceed 18 million euros when it concerns expenses incurred in the Canary Islands.

  • The amount of the deduction in article 36.3 of the LIS may not exceed 900,000 euros per production.

Deductions for donations and other contributions

  • Beneficiary entities of patronage

    The Second Final Provision of Royal Decree-Law 17/2020, of May 5, approving support measures for the cultural sector and of a tax nature to address the economic and social impact of COVID-2019 (also amended by Law 14/2021, of October 11) introduces, with effect from January 1, 2021, a new wording of Article 2 of Law 49/2002, which lists the Entities benefiting from patronage.

  • Donations, donations and contributions for priority patronage activities

    The sixty-sixth Additional Provision of Law 11/2020, of December 30, on the General State Budget for the year 2021 ( BOE of 31) establishes for 2021 what are considered priority patronage activities and raises by five percentage points the percentages and limits of the deduction for donations of article 19 of the aforementioned Law 49/2002, of December 23, in relation to these activities.

Deduction for works to improve the energy efficiency of homes

As a new feature for 2021 and with effect from October 6, article 1 of Royal Decree-Law 19/2021, of October 5, on urgent measures to promote building rehabilitation activity in the context of the Recovery, Transformation and Resilience Plan ( BOE of the 6th), introduced a new fiftieth Additional Provision in the Personal Income Tax Law , which regulates the following deductions for works to improve the energy efficiency of homes.

  • Deduction for improvement works that reduce heating and cooling demand.

  • Deduction for improvement works that reduce the consumption of non-renewable primary energy.

  • Deduction for energy rehabilitation works in buildings predominantly used for residential purposes.

The amount of these deductions falls on the total state quota.