9.5.2. Deduction for habitual and effective residence on the island of La Palma

The deduction for income obtained on the island of La Palma can be applied in the following cases:

Taxpayers residing on the island of La Palma for a period of less than three years

Taxpayers who have their habitual residence on the island of La Palma can apply this deduction for income obtained on said island.

The deduction consists of 60% of the part of the sum of the full state and regional or complementary contributions that proportionally corresponds to the income computed for the determination of the taxable bases that had been obtained in said territories.
Taxpayers residing on the island of La Palma for a period of no less than three years

This deduction may also be applied to taxpayers who have resided on said island for a period of no less than three years, in tax periods beginning after the end of that period for income obtained outside of said cities, provided that, at least one third of the taxpayer's net assets, determined in accordance with the regulations governing the Wealth Tax, is located in La Palma.

The maximum amount of income, obtained outside said territories, that can enjoy the deduction will be the net amount of the income and capital gains and losses obtained in said cities.

Income obtained in La Palma

For these purposes, the following will be considered income obtained on the island of La Palma:

Income from work, when derived from work of any kind carried out in said territories, as well as those derived from unemployment benefits and the social security systems referred to in article 17.2.a) of the Tax Law.
The income that comes from the ownership of real estate located on the island of La Palma or from real rights that fall on them.
Those that come from the exercise of economic activities actually carried out on the island of La Palma.

Operations actually carried out are understood to be those that close in these territories a commercial cycle that determines economic results or involve the provision of a professional service in said territories.

It will not be considered that these circumstances occur when it comes to isolated operations of extraction, manufacture, purchase, transportation, entry and exit of goods or effects thereon and, in general, when the operations do not determine income by themselves.

When it comes to fishing and maritime activities, the rules established in article 33 of the consolidated text of the Corporate Tax Law will apply.
Capital gains that come from real estate located on the island of La Palma.
Capital gains that come from movable property located on the island of La Palma.
Income from movable capital from obligations or loans, when the capital is invested in said territories and generates the corresponding income there.
Income from movable capital from the leasing of movable property, businesses or mines, when the object of the lease is located and is effectively used on the island of La Palma.
Income from deposits or accounts in all types of financial institutions located on the island of La Palma.