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 resident 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 quotas that proportionally corresponds to the income computed for the determination of the taxable bases that would have been obtained in said territories.
Taxpayers resident on the island of La Palma for a period of no less than three years

This deduction may also be applied by taxpayers who have resided on the 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, are located in La Palma.

The maximum amount of income obtained outside of these territories that can benefit from the deduction will be the net amount of the returns and capital gains and losses obtained in these cities.

Income obtained in La Palma

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

Income from work, when derived from work of any kind performed in said territories, as well as income derived from unemployment benefits and social security systems referred to in article 17.2.a) of the Tax Law.
Income from ownership of real estate located on the island of La Palma or property rights that affect them.
Those arising 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 a commercial cycle in these territories that determine economic results or involve the provision of a professional service in said territories.

Such circumstances shall not be deemed to occur in the case of isolated operations involving the extraction, manufacture, purchase, transportation, entry and exit of goods or effects thereon and, in general, when the operations do not in themselves determine income.

In the case of fishing and maritime activities, the rules established in article 33 of the consolidated text of the Corporate Income Tax Law will apply.
Capital gains arising from real estate located on the island of La Palma.
Capital gains arising from movable property located on the island of La Palma.
Income from movable capital arising from bonds or loans, when the capital is invested in said territories and generates the corresponding income there.
Income from movable capital arising from the leasing of movable property, businesses or mines, when the object of the lease is located and is actually 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.