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Form 200. Corporate Income Tax Declaration 2018

8.4.3.8 2018: Deduction for investment of profits (IB)

The reporting entity will enter in key [00549], the amount corresponding to the deduction generated in the tax period, and in key [00888], the amount of the deduction that is subject to application in this declaration.

This deduction was repealed by the new Corporate Tax Law with effect for tax periods beginning on January 1, 2015. However, since the deduction becomes effective when the investment is made, the twenty-fourth transitional provision of the LIS has established in its seventh section the possibility of applying said deduction in the tax periods started as of January 1, 2015, under the terms and conditions established in RDLeg . 4/2004, although the investment and other requirements occur in tax periods beginning on or after January 1, 2015.

Scope

They are entitled to this deduction:

  • Entities that meet the requirements established in article 108 of the RDLeg. 4/2004 and pay taxes in accordance with the tax scale provided for in article 114 of said regulation.

  • Entities that pay taxes in accordance with the tax scale provided for in the twelfth Additional Provision of the RDLeg. 4/2004 for maintenance or creation of employment.

Requirements

The deduction will be applied to the profits obtained in the year, not including the accounting for Corporate Tax, that are invested in new elements of tangible fixed assets or real estate investments, provided that they are used for economic activities and the conditions established in the article are met. 37 of the RDLeg. 4/2004.

Investment in new elements may also be made through a financial leasing contract.

In general, the investment must be made within the period between the beginning of the tax period in which the profits being invested are obtained and the two subsequent years. Exceptionally, the taxpayer may request the Tax Administration to approve a special investment plan.

The investment will be understood to have been made on the date on which the assets are made available, even for those that are the subject of the financial leasing contracts referred to in section 1 of the seventh Additional Provision of Law 26. /1988, July 29. However, in the latter case, the deduction will be conditional, with a resolutive nature, on the exercise of the purchase option.

Entities that apply this deduction must provide a reserve for investments, for an amount equal to the deduction base, which will be unavailable as long as the assets in which the investment is made must remain in the entity.

The reserve for investments must be allocated from the profits of the year whose amount is the object of investment.

The assets subject to investment must remain in operation in the entity's assets, except for justified loss, for a period of 5 years, or during their useful life if shorter.

However, the deduction will not be lost if the transfer of the assets subject to investment occurs before the end of the period indicated in the previous paragraph and the amount obtained or the net book value, if lower, is invested under the terms established in article 37 of the RDLeg. 4/2004.

Until the period established for maintaining the investment is met, the taxpayer must record information on: the amount of benefits eligible for the deduction and the year in which they were obtained; the unavailable reserve that must be included; Identification and amount of the purchased items; and the date or dates on which the elements have been acquired and affected the economic activity.

Failure to comply with any of the requirements set out in article 37 of the RDLeg. 4/2004 will determine the loss of the right to this deduction, and its regularization in the manner established in article 137.3 of the aforementioned rule.

Deduction base

It will be the result of applying a coefficient (with two decimal places, rounded to default) determined by:

  1. In the numerator: the profits obtained in the year, not including the accounting of the Corporate Tax, reduced by the income or income that is subject to exemption, reduction, bonus, deduction of article 15.9 of the RDLeg. 4/2004 or deduction for double taxation, exclusively in the exempt, reduced, subsidized or deducted part in the tax base, or that has generated the right to deduction in the full quota.

  2. In the denominator: the profits obtained in the year, without including the accounting for Corporate Tax.

The resulting coefficient will be taken to two decimal places, rounded by default.

Deduction amount

The deduction is determined by applying a percentage based on the deduction that will vary depending on the type of Corporate Tax assessment that applies to the entity:

  • 10% in the case of entities that meet the requirements established in article 108 of the RDLeg. 4/2004 for small entities and apply the tax scale provided for in article 114 of said standard.

  • 5% in the case of entities that pay taxes according to the tax scale provided for in the twelfth Additional Provision of the RDLeg. 4/2004 for cases of job maintenance or creation.

The deduction will be made in the full amount corresponding to the tax period in which the investment is made.

Incompatibilities

The application of this deduction is incompatible with the application of the freedom of amortization, with the deductions to encourage the performance of certain activities and with the deduction for investments regulated in article 94 of Law 20/1991, of June 7, of modification of the fiscal aspects of the Economic and Fiscal Regime of the Canary Islands, with the Reserve for investments in the Canary Islands regulated in article 27 of Law 19/1994, of July 6, modifying the Economic and Fiscal Regime of the Canary Islands.