4.2.54 Keys 01822 and 00372 reduction of income from certain intangible assets (Art. 23 and DT 20ª LIS)

The regulation of the incentive to reduce income from the transfer of certain intangible assets ("patent box") has been subject to various modifications, so the applicable tax regime is different depending on the date on which the transfer or assignment of the assets took place:

Before 29-09-2013

(Article 23 TRLIS , as amended by Law 16/2007, of July 4)
- Amount of reduction and requirements
  
  Income from the transfer of the right to use or exploit patents, designs or models, plans, secret formulas or procedures, rights to information relating to industrial, commercial or scientific experiences, will be included in the tax base at 50 percent of its amount, when the following requirements are met:
  - That the transferor entity has created the assets to be transferred.
  - That the transferee uses the rights of use or exploitation in the development of an economic activity and that the results of such use do not materialize in the delivery of goods or provision of services by the transferee that generate tax-deductible expenses in the transferor entity, provided that, in the latter case, said entity is linked to the transferee.
  - That the transferee does not reside in a country or territory with zero taxation or considered a tax haven.
  - When a single transfer contract includes accessory services, the corresponding consideration for these must be differentiated in said contract.
  - That the entity has the necessary accounting records to be able to determine the direct and indirect income and expenses corresponding to the assets being transferred.
- Fiscal adjustments
  
  In the event that the taxpayer applies the reduction provided for in the previous sections on income derived from the transfer of intangible assets, he/she must make a negative adjustment to the accounting result in key [00372] "Reduction of income from certain intangible assets (art. 23 and DT 20 LIS )" , recording 50 percent of said income.
From 29-09-2013 to 30-06-2016

(Article 23 LIS, original wording)
- Amount of reduction and requirements
  
  Income from the transfer of the right to use or exploit patents, designs or models, plans, secret formulas or procedures, rights to information relating to industrial, commercial or scientific experiences, will be included in the tax base at 40 percent of its amount, when the following requirements are met:
  - That the transferor entity has created the assets to be transferred at least 25 percent of their cost.
  - That the transferee uses the rights of use or exploitation in the development of an economic activity and that the results of such use do not materialize in the delivery of goods or provision of services by the transferee that generate tax-deductible expenses in the transferor entity, provided that, in the latter case, said entity is linked to the transferee.
  - That the assignee does not reside in a tax-free country or territory or one that is classified as a tax haven, unless it is in a European Union member state and the taxpayer can prove that the operations are for valid economic reasons.
  - When a single transfer contract includes accessory services, the corresponding consideration for these must be differentiated in said contract.
  - The company has the accounting records required to determine the direct income and expenses corresponding with the assets being transferred.
  The above will also apply in the case of the transfer of intangible assets referred to therein, when said transfer is carried out between entities that do not form part of a group of companies according to the criteria established in article 42 of the Commercial Code, regardless of residence and the obligation to prepare consolidated annual accounts.
- Income from the transfer of intangible assets
  
  In the case of transfer of intangible assets, for the purposes of their integration into the tax base with the reduction set out in the previous section, regardless of whether the asset is or is not recognised in the entity's balance sheet, income shall be understood as the positive difference between the income of the year from the transfer of the right to use or exploit the assets, and the amounts deducted in the same by application of articles 12.2 or 13.3 of the LIS, where applicable, and by those expenses of the year directly related to the transferred asset.
- Fiscal adjustments
  
  In the event that the taxpayer applies the reduction provided for in the previous sections on income derived from the transfer or transmission of intangible assets, he/she must make a negative adjustment to the accounting result in key [00372] "Reduction of income from certain intangible assets (art. 23 and DT 20 LIS)" page 13 of form 200, recording 60 percent of said income.
From 01-07-2016 to 31-12-2017

(Article 23 LIS, as amended by Law 48/2015, of October 29)
- Reduction amount
  
  Income from the transfer of the right to use or exploit patents, designs or models, plans, secret formulas or procedures, rights to information relating to industrial, commercial or scientific experiences, shall be entitled to a reduction in the tax base by the percentage resulting from multiplying the result of the following coefficient by 60 percent:
  - In the numerator, expenses incurred by the entity directly related to the creation of the asset, including those derived from sub-contracting with unassociated third parties. These expenses will be increased by 30 percent, without, in any case, the numerator being able to exceed the amount of the denominator.
  - In the denominator, the expenses incurred by the transferor entity directly related to the creation of the asset, including those derived from subcontracting and, where applicable, the acquisition of the asset.
  In no case shall the aforementioned coefficient include financial expenses, repayments on properties or other expenses not directly related to the creation of the asset.
  
  The above will also apply in the case of the transfer of intangible assets referred to therein, when such transfer is carried out between entities that do not have the status of related parties.
- Income from the transfer of intangible assets
  
  In the case of transfer of intangible assets, for the purposes of their integration into the tax base with the reduction set out in the previous section, regardless of whether the asset is or is not recognised in the entity's balance sheet, income shall be understood as the positive difference between the income of the year from the transfer of the right to use or exploit the assets and the amounts deducted in the same by application of article 12.2 of the LIS, and by those expenses of the year directly related to the transferred asset.
- Requirements
  
  To apply this reduction, the following requirements must be met:
  - That the transferee uses the rights of use or exploitation in the development of an economic activity and that the results of such use do not materialize in the delivery of goods or provision of services by the transferee that generate tax-deductible expenses in the transferor entity, provided that, in the latter case, said entity is linked to the transferee.
  - That the assignee does not reside in a tax-free country or territory or one that is classified as a tax haven, unless it is in a European Union member state and the taxpayer can prove that the operations are for valid economic reasons.
  - When a single transfer contract includes accessory services, the corresponding compensation for these must be differentiated in said contract.
  - The company has the accounting records required to determine the direct income and expenses corresponding with the assets being transferred.
- Fiscal adjustments
  
  In the event that the taxpayer applies the reduction provided for in the previous sections on income derived from the transfer or transmission of intangible assets, he/she must make a negative adjustment to the accounting result in key [00372] "Reduction of income from certain intangible assets (art. 23 and DT 20 LIS)" on page 13 of form 200, recording as an amount the percentage resulting from multiplying by 60 percent the result of the coefficient provided for in article 23.1 of the LIS.
From 01/01/2018

(Article 23 LIS, as amended by Law 6/2018, of July 3)
- Reduction amount
  
  Positive income from the transfer of the right to use or exploit patents, utility models, supplementary protection certificates for medicines and phytosanitary products, legally protected designs and models, derived from research and development and technological innovation activities, and registered advanced software derived from research and development activities, will be entitled to a reduction in the tax base by the percentage resulting from multiplying the result of the following coefficient by 60 percent:
  - In the numerator, expenses incurred by the entity directly related to the creation of the asset, including those derived from sub-contracting with unassociated third parties. These expenses will be increased by 30 percent, without, in any case, the numerator being able to exceed the amount of the denominator.
  - In the denominator, the expenses incurred by the transferor entity directly related to the creation of the asset, including those derived from subcontracting both with third parties not related to the former and with persons or entities related to the latter and from the acquisition of the asset.
  In no case shall the aforementioned coefficient include financial expenses, repayments on properties or other expenses not directly related to the creation of the asset.
  
  The reduction provided for in this section will also apply to positive income from the transfer of the intangible assets referred to therein, when said transfer is made between entities that do not have the status of related parties.
  
  For the purposes of determining the legal protection regime for intangible assets referred to in the first paragraph of this section, the provisions of Spanish, European Union and international regulations on industrial and intellectual property that are applicable in Spanish territory shall apply.
- Positive incomes susceptible to reduction
  
  For the purposes of applying this reduction, the following will be considered positive income susceptible to reduction: income from the transfer of the right to use or exploit the assets and positive income from their transfer, which exceed the sum of the expenses incurred by the entity directly related to the creation of the assets that have not been incorporated into the value of the assets, the amounts deducted by application of article 12.2 of the LIS in relation to the assets, and those expenses directly related to the assets, which have been included in the tax base.
- Negative income subject to reduction
  
  In the event that negative income is obtained in a tax period and in previous tax periods the entity had obtained positive income to which it had applied the reduction provided for in this article, the negative income of that tax period will be reduced by the percentage resulting from article 23 of the LIS.
  
  The above will apply as long as the negative income does not exceed the amount of positive income integrated in previous tax periods by applying the reduction provided for in this article. The excess will be fully integrated into the tax base and, in such case, the positive income obtained in a subsequent tax period will be fully integrated up to said amount, being able to apply to the excess the percentage resulting from the application of article 23 of the LIS.
- Requirements
  
  The following requirements must be met for the reduction to be applied:
  - That the transferee uses the rights of use or exploitation in the development of an economic activity and that the results of such use do not materialize in the delivery of goods or provision of services by the transferee that generate tax-deductible expenses in the transferor entity, provided that, in the latter case, said entity is linked to the transferee.
  - That the assignee does not reside in a tax-free country or territory or one that is classified as a tax haven, unless it is in a European Union member state and the taxpayer can prove that the operations are for valid economic reasons.
  - When a single transfer contract includes accessory provisions of goods or services, the corresponding consideration for these must be differentiated in said contract.
  - That the entity has the necessary accounting records to be able to determine each of the direct income and expenses referred to in article 23 of the LIS, corresponding to the assets subject to transfer.
- Fiscal adjustments
  
  According to the provisions of article 23 of the LIS, taxpayers must make the following adjustments in the keys [01822] and [00372] "Reduction of income from certain intangible assets (art. 23 and DT 20 LIS)" on page 13 of the form:
  - In the event that the taxpayer obtains positive income derived from the transfer or transmission of intangible assets, he/she must make a negative adjustment to the accounting result in key [00372] , recording as an amount the percentage resulting from multiplying by 60 percent the result of the coefficient provided for in article 23.1 of the LIS.
  - In the event that the taxpayer obtains negative income derived from the transfer or transmission of intangible assets and in the previous tax period has obtained positive income to which has been applied the reduction provided for in article 23 of the LIS (and whose integration into the tax base will have been recorded in key [00372]), must make a positive adjustment to the accounting result in key [01822] , recording the amount of negative income reduced by the percentage resulting from article 23.1 of the LIS.

In the event that negative income is obtained in a tax period and in previous tax periods the entity had obtained positive income to which the reduction provided for in this article had been applied, the negative income of that tax period will be reduced by the percentage resulting from article 23 of the LIS.