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Form 200. Corporate Income Tax Declaration 2018

8.4.3.6 2018: Deductions for job creation and hiring of unemployed persons with benefits. unemployment (CEM-2)

Entities may apply the deductions established in article 37 of the LIS provided that they hire through the indefinite employment contract to support entrepreneurs defined in article 4 of Law 3/2012, of July 6, on Urgent Measures for the Reform of the Labor Market.

The reporting entity must record in code [00931] the amount attributable to it in the tax period subject to the declaration, in code [00502] the amount of said amount that it applies in the tax period subject to the declaration, and in code [00751] the part of that amount that, because it was not included in code [00502], remains pending for future periods.

Amount of deduction

50% of the lesser of the following amounts:

  • The amount of unemployment benefit that the worker was due to receive at the time of hiring.

  • The amount corresponding to twelve monthly payments of unemployment benefits that you have been granted.

The application of this deduction, which does not exclude the application of the deduction for job creation for hiring people under 30 years of age, is subject to the following requirements:

  • Having a workforce of less than 50 employees at the time of hiring unemployed persons receiving contributory unemployment benefits (regulated by the General Social Security Law).

  • The deduction will be applied to contracts entered into during the tax period until a workforce of 50 employees is reached.

  • In the twelve months following the start of the employment relationship, for each worker there must be an increase in the average total workforce of the entity of at least one unit compared to the number existing in the previous twelve months.

  • The contracted worker must have received unemployment benefits for at least three months prior to the start of the employment relationship. For these purposes, the worker must provide the entity with a certificate from the State Public Employment Service.

Application of the deduction

These deductions will be applied to the full amount of the tax period corresponding to the end of the one-year trial period required in the corresponding type of contract and will be conditional on maintaining this employment relationship for at least 3 years from the date of its start.

Failure to comply with any of the requirements set out in this article will result in the loss of the deduction, which will be regularised in the manner established in article 125.3 of the LIS.

However, the obligation to maintain employment will not be deemed to have been breached when the employment contract is terminated, once the trial period has elapsed, for objective reasons or disciplinary dismissal when one or the other is declared or recognised as appropriate, resignation, death, retirement or permanent total, absolute or severe disability of the worker.

The contracted worker who gives the right to one of the deductions referred to will not be counted for the purposes of the increase in staff established in article 102 of the LIS.

Deadline to apply for the deduction

Amounts not deducted due to insufficient quota may be applied in the liquidations of the tax periods that end in the next 15 years.

Note:

With effect for tax periods beginning on or after 7 November 2018, Law 8/2018 of 5 November, which modifies Law 19/1994 of 6 July, adds Article 94 bis to Law 20/1991 of 7 June, amending the tax aspects of the Canary Islands Economic and Fiscal Regime, which includes in the Canary Islands the application of deductions for job creation in Article 37 of the LIS.

According to the provisions of article 94 bis of Law 20/1991, entities that hire a worker to carry out their activity in the Canary Islands will have the right to apply the deductions for job creation of article 37 of the LIS, increased by 30 percent:

  • Job creation by hiring people under 30 years of age: 3,900 euros for hiring the first worker under 30 years of age through an open-ended contract to support entrepreneurs.

  • Job creation by hiring unemployed people with unemployment benefits: 65 percent of the lowest of the amounts specified in letters a) and b) of article 37.2 of the LIS.