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Form 100. 2019 Personal Income Tax return

9.9.2.1. Reserves for investments in the Canary Islands

The term for making the investment reserve in the Canary Islands is three years, pursuant to article 27,4 of the Act 19/1994, of 6 July, amending the Canary Islands Economic and Tax Regime, as drafted by Royal Decree-Law 15/2014 , of 19 December, amending the Canary Islands Economic and Tax Regime.

This three-year period must be counted from the date on which the reserve's endowment (accounting) occurs, which may be:

  •  At the end of the accounting year, on 31 December each year.
  • In the year following the year of obtaining the profit.

In accordance with the provisions set out for the completion, taxpayers under the Canary Islands Investment Reserve regime will enter, using a data capture window, the amount of the allowances corresponding to each of the financial years in the following boxes:

  • In boxes [0733], [0735], [0738], [0742] and [0746], the amount of the allowances corresponding to incomes obtained in the Canary Islands from 2015 to 2019 that have been allocated to the Canary Islands Investment Reserve (RIC) will be entered. Please note that as a result of the calculation of the term we previously referred to in the case of the Canary Islands Investment Reserve 2015, box [0733] only the reserves for investments obtained from profits for 2019 can be materialized in 2015 if it was allocated in 2016.
  • [0734], [0789], [0792], [0794] And [0802] boxes will be indicated for the year of the allocation (2016 to 2019), which may be at the close of the financial year in which the net operating income has been obtained or in the following financial year.

  • [0777], [0736], [0739], [0743] And [0747] boxes will indicate the amount of the materials provisioning made against the previously declared endowment in investments provided for in points A, B bis and D 27,4 of article 19 of Law 1994/.

  • [0778], 0737], [0740], [0744], [0748] And [0751] boxes will be indicated on amount of the materialisations carried out against the previously declared endowment in the investments provided for in points C and D 27,4 to 19 of article 1994 of Act/.
  • Boxes [0790], [0741], [0745] and [0749].

    The amount of each of the previously declared provisions that are pending materialisation at 31 December 2019 will be indicated. Box [0790] can only be completed if the booking obtained from the 2016 profits was made available in 2017.

Taxpayers may make early investments of future reserves for investments, provided that they meet the remaining requirements of the reserve and the aforementioned provisions are made against profits obtained until 31 December 2019.

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

  • Box [0750].

    The amount of investments made in 2019 as the early realisation of future provisions in the provisions of article 27,4 will be indicated. A, B bis and D, Act 19/1994.

  • Box [0751].

    The amount of investments made in 2019 as the early realisation of future provisions in the provisions of article 27,4 will be indicated. C and D 2º a 6º, Act 19/1994.

Investments in which the provisions made may materialize 

The provisions to the reserve may be made in one of the following investments when the requirements of article 27,4 of the Canary Islands Tax Regime Act 19/1994 are met:

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

    • The creation or extension of a establishment.

    • Diversification of the activity of a establishment to prepare new products.

    • Substantial transformation in the production process of a establishment.

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

      1. To the promotion of protected housing and are intended for lease by the developer company.

      2. To the development of industrial activities included in Divisions 1 to 4 of the first section of the Economic Activities Tax.

      3. To the commercial areas and tourist activities under the terms set out in article 27,4 of Law 19/1994 of the Canary Islands Economic and Tax Regime.

  2. Creation of related jobs directly with the investments provided for in point A, which take place within a period of six months from the date of entry into operation of this investment and meet certain requirements for increasing the workforce The creation of jobs carried out in the tax period that cannot be considered as an initial investment because it does not meet any of the requirements set out in Article 27, with the limit of 50 per 100 of the provisions made by the taxpayer to the Reserve in the tax period.

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

  4. Subscription of:

    1. Shares or holdings in the capital issued by companies as a result of their incorporation or capital increase in the archipelago, provided that the requirements established in article 27,4 of Act 19/1994 are met

    2. Shares or holdings in the capital issued by entities in the Canary Islands Special Zone as a result of their incorporation or capital increase, provided that they meet the requirements and conditions set out in the previous issue number 19 and those set out in Chapter I of Title V of Act 1994/.

      In addition, the following conditions must be met:

      The amount of the issue or the 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 for the Canary Islands investment reserve and will be paid immediately after the execution of the deed of incorporation or capital increase.

    3. Any financial instrument issued by financial institutions provided that the funds collected in order to materialize the Reserve are intended for financing in the Canary Islands of private projects, whose investments are suitable in accordance with the provisions of this Article, provided that the issues are supervised by the Government of the Canary Islands , and have a binding report from the Tax Agency.

    4. Securities of public debt of the Autonomous Community of the Canary Islands, of the Canary Islands Local Corporations or of their public companies or Autonomous Bodies , provided that it is used to finance investments in infrastructure and equipment or to improve and protect the environment in the Canary Islands, with a limit of fifty percent of the allowances made in each financial year.

    5. Securities issued by public bodies that are used to build or operate infrastructures or public facilities for public administrations in the Canary Islands, when the financing obtained with this issue is exclusively used for such construction or operation, with a limit of fifty percent of the allowances made in each financial year.
    6. Securities issued by entities that are the result of the construction or operation of infrastructures or public equipment of interest for the Public Administrations in the Canary Islands, when the financing obtained with this issue is exclusively used for this construction or operation, up to a limit of fifty percent of the provisions made in each financial year and under the terms provided for in the regulations.