9.10.2. Deduction for investment in new elements of tangible assets or real estate investments affected by economic activities

This deduction can be applied by personal income tax taxpayers who carry out economic activities and who meet the requirements to be considered a small-sized entity, in the year in which the investment returns are obtained.

Purpose and basis of the deduction

The net income from economic activities for the years 2020 or 2021 that are invested in 2021 in new elements of property, plant and equipment or real estate investments assigned to economic activities carried out by the taxpayer will give the right to the deduction.

For these purposes, it is understood that the net income from economic activities of the tax period is the object of investment when an amount equivalent to the part of the general positive taxable base of the tax period that corresponds to such income is invested, without in any case the same amount can be understood as invested in more than one asset.

The basis of the deduction will be the amount invested, that is, the part of the positive general taxable base of the tax period corresponding to the net income from economic activities of the tax period subject to investment in new elements of tangible fixed assets or real estate investments.

Time to make the investment

The investment in assets used for economic activities must be made 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 occur in the tax period in which the investment is made, although it will be conditional on the impact of the asset element on the economic activity within the investment period.

The investment will be deemed to have been made on the date on which the assets are made available, even in the case of assets that are the subject of the financial leasing contracts referred to in section 1 of the seventh Additional Provision. of Law 26/1988, of July 29, on discipline and intervention of credit institutions. However, in the latter case, the deduction will be conditional, with a resolutive nature, on the exercise of the purchase option.

The making available of the assets must be understood as the availability of the thing that is the object of the contract, that is, upon delivery, that is, it represents the mode of acquisition of ownership by the purchaser.

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

Percentage of deduction

• 5% generally

• 2.5% in the following cases:

  1. If in the year in which the reinvested returns were obtained, the 20% reduction of the declared positive net return was applied, provided for in article 32.3 of the Personal Income Tax Law for taxpayers who begin the exercise of an economic activity and determine the return net of the same according to the direct estimation method.

  2. If the reinvested returns gave rise to the right to the deduction for income obtained in Ceuta or Melilla under article 68.4 of the LIRPF in the year in which they were obtained.

Limits

The amount of the deduction may not exceed the sum of the full state and regional quota for the tax period in which the net income from economic activities was obtained.

Permanence in the taxpayer's assets of assets that are the object of investment

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

Incompatibility

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