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Form 100. Personal Income Tax Return 2019

9.9.2.1. Allocations to the reserve for investments in the Canary Islands

The period to materialize the reserve for investments in the Canary Islands is three years, by virtue of the provisions of article 27.4 of Law 19/1994, of July 6, modifying the Economic and Fiscal Regime of the Canary Islands, wording given by the Royal Decree-Law 15/2014, of December 19, modifying the Economic and Fiscal Regime of the Canary Islands.

This period of three years must be counted from the date on which the provision (accounting) of the reserve occurs, which in the case of natural persons can be:

  •  At the close of the accounting period on December 31 of each year.
  • In the year following the year in which the profit is obtained.

In accordance with what has been explained for completion, taxpayers covered by the Reserve for Investments in the Canary Islands regime will enter, through a data capture window, the amount of the provisions corresponding to each of the years in the following boxes:

  • In boxes [0733], [0735], [0738], [0742] and [0746] the amount of the provisions corresponding to income obtained in the Canary Islands from 2015 to 2019 that have been allocated to the Reserve for Investments in the Canary Islands will be entered. (RIC). Please note that as a consequence of the calculation of the period we referred to above in the case of the Reserve for Investments in the Canary Islands 2015, box [0733] will only be able to materialize the reserve in the 2019 financial year. for investments obtained with a charge to profits from fiscal year 2015 if it was allocated for accounting purposes in 2016.
  • Boxes [0734], [0789], [0792], [0794] and [0802] indicate the year of the provision (2016 to 2019), which may be at the end of the year in which the net operating income was obtained. or in the following exercise.

  • Casillas [0777], [0736], [0739], [0743] and [0747] will indicate the amount of the materializations made against the previously declared allocation in the investments provided for in letters A, B, B bis and D 1 of article 27.4 of Law 19/1994.

  • Casillas [[0778], 0737], [0740], [0744], [0748] and [0751] will indicate the amount of the materializations made against the previously declared allocation in the investments provided for in letters C and D 2 to 6 of article 27.4 of Law 19/1994.
  • Boxes [0790], [0741], [0745] and [0749].

    The amount of each of the previously declared provisions that is pending materialization as of December 31, 2019 will be indicated. Box[0790] can only be completed if the reserve obtained from 2016 profits was recorded in 2017.

Taxpayers may make advance investments of future contributions to the investment reserve, provided that they meet the remaining requirements set forth therein and the aforementioned provisions are made with a charge to profits obtained until December 31, 2019.

You must indicate the anticipated investments in the data capture window, distinguishing:

  • Box [0750].

    The amount of investments made in 2019 will be indicated for the early materialization of future provisions in those provided for in article 27.4. A, B, B bis and D 1, Law 19/1994.

  • Box [0751].

    The amount of investments made in 2019 will be indicated for the early materialization of future provisions in those provided for in article 27.4. C and D 2 to 6, Law 19/1994.

Investments in which the provisions made can be materialized 

The allocations to the reserve may be materialized in any of the following investments when the requirements of article 27.4 of Law 19/1994 of the Canary Islands Tax Regime are met:

  1. Initial investments consisting of the acquisition of new tangible or intangible fixed assets as a result of:

    • The creation or expansion of an establishment.

    • The diversification of an establishment's activity for the production of new products.

    • The substantial transformation in the production process of an establishment.

    • Investments in land, built or not, provided that they have not previously benefited from this regime and are affected:

      1. For the promotion of protected housing and intended for leasing by the developer company.

      2. For the development of industrial activities included in divisions 1 to 4 of the first section of the rates of the Tax on Economic Activities.

      3. To commercial areas and tourist activities under the terms established in article 27.4 of Law 19/1994 of the Economic and Fiscal Regime of the Canary Islands.

  2. Creation of jobs directly related to the investments provided for in letter A, which occurs within a period of six months from the date of entry into operation of said investment and meets certain requirements for increasing staff. The creation of jobs carried out in the tax period that cannot be considered as an initial investment for not meeting any of the requirements established in letter B of article 27, with a limit of 50% of the allocations to the Reserve made by the taxpayer in the tax period.

  3. Acquisition of tangible or intangible fixed assets that cannot be considered as an initial investment due to not meeting any of the conditions established in letter A above, investment in assets that contribute to the improvement and protection of the environment in the Canary Islands, as well as those research and development expenses that are determined by regulation.

  4. Subscription of:

    1. Shares or interests in the capital issued by companies as a result of their incorporation or capital increase that carry out their activity in the archipelago, provided that the requirements established in article 27.4 of Law 19/1994 are met.

    2. Shares or interests in the capital issued by entities of the Canary Islands Special Zone as a result of their incorporation or capital increase, provided that the requirements and conditions established in number 1 above and those provided for in Chapter I of Title V of Law 19/1994 are met.

      Additionally, the following conditions must be met:

      The amount of the issue or capital increase will be greater than 750,000 euros.

      At least 10% of the issue or capital increase will be subscribed by a person or entity that does not materialize amounts allocated to the reserve for investments in the Canary Islands and will be disbursed immediately after the granting of the deed of incorporation or capital increase.

    3. Any financial instrument issued by financial institutions provided that the funds raised for the purpose of materializing the Reserve are intended to finance private projects in the Canary Islands, whose investments are suitable in accordance with the regulations in this article, provided that the issues are supervised by the Government of the Canary Islands, and have a binding report from the State Tax Administration Agency.

    4. Public debt securities of the Autonomous Community of the Canary Islands, of the Canary Islands Local Corporations or of their public companies or autonomous bodies, provided that they are intended to finance investments in infrastructure and equipment or in the improvement and protection of the environment in the Canary Islands, with a limit of fifty percent of the provisions made in each financial year.

    5. Securities issued by public bodies that carry out the construction or operation of infrastructure or equipment of public interest for public administrations in the Canary Islands, when the financing obtained from said issue is exclusively intended for such construction or operation, with a limit of fifty percent of the provisions made in each financial year.
    6. Securities issued by entities that carry out the construction or operation of infrastructure or equipment of public interest for the public administrations in the Canary Islands, when the financing obtained from said issue is exclusively intended for such construction or operation, with a limit of fifty percent of the provisions made in each financial year and in the terms provided for by regulation.