9,8,3. Deduction for investment in new elements of tangible fixed assets or real estate investments that affect economic activities

Taxpayers of the Personal Income Tax who carry out economic activities and who meet the requirements for being considered a small entity can apply this deduction in the year in which the returns are obtained.

Purpose and basis of the deduction

The net income from economic activities in 2018 or 2019 that are invested in 2019 in new elements of tangible fixed assets or investment property used for economic activities carried out by the taxpayer will be eligible for the deduction.

The amount of the net returns of economic activities that are invested in new elements must be entered in boxes 0830 and 0833, of Annex A.4) of the tax return.

For these purposes, net earnings from economic activities in the tax period are understood to be investment when an amount equivalent to the part of the positive general net tax base of the tax period corresponding to such returns, without the same amount being considered invested in more than one asset.

The deduction base will be the amount invested, i.e. the part of the general net tax base of the tax period corresponding to the net income from economic activities of the tax period that are invested in new elements of tangible fixed assets or real estate investments.

Term for making the investment

Investment in equity elements used for economic activities must be carried out in the tax period in which the returns subject to reinvestment are obtained or in the following tax period.

The right to apply the deduction will take place in the tax period in which the investment is made, although it will be conditional on the impact of the equity element on economic activity within the investment period.

The investment will be understood as made on the date on which the assets are made available, even in the case of elements assets that are subject to the financial lease contracts referred to in paragraph 1 of the seventh additional provision of Act 26 / 1988, of 29 July, on the discipline and intervention of credit institutions. However, in the latter case, the deduction will be conditional, in a decisive manner, on the exercise of the purchase option.

The provision of the equity elements must be understood as the availability of the subject matter of the contract, i.e. the delivery, i.e. it represents the acquisition of the domain by the acquirer.

The deduction will be applied to the full amount corresponding to the tax period in which the investment is made.

Deduction percentage

• 5%, In general 100

• 2.5 Per 100, in the following cases:

  1. A) If in the financial year in which the reinvested yields were obtained, the reduction of 20% of the positive net yield was applied 100 declared, provided for in article 32,3 of the Personal Income Tax Act for taxpayers who start exercising an economic activity and determine the net return thereof in accordance with the direct estimation method.

  2. B) If the reinvested yields gave rise to the right to deduction for income obtained in Ceuta or Melilla under article 68,4 of the Personal Income Tax Act in the year in which they were obtained.

Limits

The amount of the deduction may not exceed the sum of the total state and autonomous community tax period in which the net income from economic activities was obtained.

Permanence in the taxpayer's assets and capital elements subject to investment

The capital assets subject to investment must remain in operation in the taxpayer's assets, except for justified losses, for a period of 5 years, or during their useful life if they are lower.

Incompatibility

This deduction is incompatible with the application of the freedom of amortisation, with the deduction for investments regulated in article 94 of Act 20 / 1991, of 7 June, amending the tax aspects of the Canary Islands Economic Regime, and with the Reserve for investments in Canary Islands regulated in article 27 of the Canary Islands Economic and Tax Regime Act 19/1994, of 6 July