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Form 200. Corporate Income Tax Declaration 2018

8.4.3.10 2018: Investments in land West Africa and propaganda and advertising expenses (art. 27 bis Law 19/1994) (TAP)

Scope

Entities subject to Corporate Tax with tax domicile in the Canary Islands whose net turnover in the immediately preceding tax period is equal to or less than 10 million euros and with an average workforce in said period are entitled to apply these deductions. to 50 people.

In the case of entities that are part of a group of companies within the meaning of article 42 of the Commercial Code, regardless of residence and the obligation to prepare consolidated annual accounts, the net amount of the turnover and the workforce media will refer to the set of entities belonging to the same group.

When the entity is newly created, the net amount of the turnover will refer to the first tax period in which the activity is actually carried out. If the immediately preceding tax period had a duration of less than one year, or the activity had been carried out for a shorter period, the net amount of the turnover will be increased to one year.

The deduction for investments in West African territories will be applied in the tax period in which the investee entity or permanent establishment begins economic activity, and will be conditional on an increase in the taxpayer's average workforce in the Canary Islands in that tax period with respect to the average workforce existing in the previous tax period and the maintenance of said increase for a period of 3 years.

Requirements and amount of the deduction

Entities may deduct 15 percent of the investments that are actually made in the constitution of subsidiaries or permanent establishments in the Kingdom of Morocco, in the Islamic Republic of Mauritania, in the Republic of Senegal, in the Republic of Gambia, in the Republic of Guinea Bissau and in the Republic of Cape Verde, provided that these entities carry out economic activities in said territories within a period of 1 year from the moment of the investment. The application of the deduction will require:

  • that the entity, alone or jointly with other entities with tax domicile in the Canary Islands, holds a percentage of participation in the capital or equity of the subsidiary of at least 50 percent, and

  • that the investment in said investee entity or permanent establishment is maintained for a period of at least 3 years.

This same percentage may be applied to the amount paid for propaganda and advertising expenses for multi-year projection for the launch of products, opening and prospecting of markets abroad and attendance at fairs, exhibitions and similar events, including in this case those held. in Spain on an international basis.

These deductions will be 10 percent when, the requirements set forth in the first paragraph of this section are not met, the aforementioned net amount of turnover does not exceed 50 million euros and the aforementioned average workforce is less than 250.

This deduction will be subject to the limits established in section 1 of article 39 of Law 27/2014, of November 27, on Corporate Tax.

The deductions for investment of profits, for expenses and investments of forestry companies and for investments in West African territories and for propaganda and advertising expenses to which we have referred in the previous sections, will be computed together with the deductions established in Chapter IV of Title VII of the LIS with the same limits and conditions established in article 39 of said Law.