4.2.54 Codes 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 occurred or transfer of assets:

1. Before 29-09-2013

   (article 23 TRLIS , according to the wording of Law 16/2007, of July 4)

   • Reduction amount and requirements

     Income from the transfer of the right to use or exploit patents, drawings or models, plans, formulas or secret procedures, rights to information relating to industrial, commercial or scientific experiences, will be integrated into the tax base at 50%. cent of its amount, when the following requirements are met:

     • That the transferring 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 this 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 the same assignment contract includes accessory services, the corresponding consideration must be differentiated in said contract.

     • That the entity has the necessary accounting records to be able to determine the income and expenses, direct and indirect, corresponding to the assets being transferred.

   • Tax adjustments

     In the event that the taxpayer applies the reduction provided for in the previous sections on the income derived from the transfer of intangible assets, he must make a negative adjustment to the accounting result in code [00372] «Reduction of income from of certain intangible assets (art. 23 and DT 20 LIS )» , recording 50 percent of said income.

2. From 29-09-2013 to 30-06-2016

   (article 23 LIS, original wording)

   • Reduction amount and requirements

     Income from the assignment of the right to use or exploit patents, drawings or models, plans, formulas or secret procedures, rights to information relating to industrial, commercial or scientific experiences, They will be integrated into the tax base at 40 percent of their amount, when the following requirements are met:

     • That the transferring 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 this 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 the same assignment contract includes accessory services, the corresponding consideration 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 foregoing will also apply in the case of transfer of the intangible assets referred to therein, when said transfer is carried out between entities that are not part of a group of companies according to the criteria established in article 42 of the Commercial Code, with independence 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 included in the previous section, regardless of whether or not the asset is recognized in the entity's balance sheet, income will be understood as the difference positive between the income for the year from the transfer of the right to use or exploit the assets, and the amounts that are deducted therein by application of articles 12.2 or 13.3 of the LIS, where applicable, and for those expenses of the year directly related to the transferred asset.

   • Tax adjustments

     In the event that the taxpayer applies the reduction provided for in the previous sections on income derived from the assignment or transmission of intangible assets, he 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 60 percent of said income.

3. From 07-01-2016 to 12-31-2017

   (article 23 LIS, according to Law 48/2015, of October 29)

   • Reduction amount

     Income from the assignment of the right to use or exploit patents, drawings or models, plans, formulas or secret procedures, rights to information relating to industrial, commercial or scientific experiences, They will be entitled to a reduction in the tax base in 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 increase 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 transferring entity directly related to the creation of the asset, including those derived from subcontracting and, where applicable, 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 foregoing will also apply in the case of transfer of the intangible assets referred to therein, when said 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 included in the previous section, regardless of whether or not the asset is recognized in the entity's balance sheet, income will be understood as the difference positive between the income for the year from the transfer of the right to use or exploit the assets and the amounts that are deducted therefrom by application of article 12.2 of the LIS, and for those expenses for 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 this 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 the same assignment contract includes accessory services, the corresponding consideration 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.

   • Tax adjustments

     In the event that the taxpayer applies the reduction provided for in the previous sections on the income derived from the assignment or transmission of intangible assets, he must make a negative adjustment to the accounting result in the key [00372] "Reduction of income from certain intangible assets (art. 23 and DT 20 LIS)» on page 13 of model 200, recording as the amount the percentage resulting from multiplying by 60 percent the result of the coefficient provided for in article 23.1 of the LIS.

4. From 01/01/2018

   (article 23 LIS, according to Law 6/2018, of July 3)

   • Reduction amount

     Positive income from the transfer of the right to use or exploit patents, utility models, complementary certificates for the protection of medicines and phytosanitary products, legally protected drawings and models, which derive from research and development activities and technological innovation, and registered advanced software that derives from research and development activities, will be entitled to a reduction in the tax base in the percentage resulting from multiplying by 60 percent the result of the following coefficient:

     • 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 increase 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 transferring entity directly related to the creation of the asset, including those derived from subcontracting both with third parties not related to it and with persons or entities linked to it 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 transmission of the intangible assets referred to in it, when said transmission is carried out between entities that do not have the status of linked.

     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 will apply. regarding industrial and intellectual property that is applicable in Spanish territory.

   • Positive income susceptible to reduction

     For the purposes of applying this reduction, the income from the transfer of the right to use or exploit the assets and the positive income from their transmission, which exceed the sum of the expenses incurred, will be considered positive income susceptible to reduction. by the entity directly related to the creation of the assets that had not been incorporated into the value of the assets, of the amounts deducted by application of article 12.2 of the LIS in relation to the assets, and of those expenses directly related to the assets, that had been integrated into the tax base.

   • Negative income susceptible 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 the reduction provided for in this article would have been applied, the negative income of that tax period will be reduced by the percentage resulting from the 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 integrated in its entirety into the tax base and, in such case, the positive income obtained in a subsequent tax period will be integrated in its entirety up to said amount, and the percentage resulting from the application of article 23 of the LIS.

   • Requirements

     To apply the 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 this 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 the same transfer contract includes accessory benefits of goods or services, the consideration corresponding to them 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 being transferred.

   • Tax adjustments

     According to the provisions of article 23 of the LIS, taxpayers must make the following adjustments in keys [01822] and [00372] «Reduction of income from certain intangible assets (art. 23 and DT 20 LIS )» on page 13 of the model:

     • In the event that the taxpayer obtains positive income derived from the assignment or transmission of intangible assets, they must make a negative adjustment to the accounting result in key [00372] , recording as the 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 assignment or transmission of intangible assets and in the previous tax period has obtained positive income to which the reduction provided for in the article 23 of the LIS (and whose integration into the tax base will have been included in key [00372]), you must make a positive adjustment to the accounting result in key [01822] , recording the amount desired 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 would have been applied, the negative income of that tax period will be reduced by the percentage that results. of article 23 of the LIS.