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Form 200. Corporate Income Tax Declaration 2019

8.4.3.10 2019: Investments in West African territories and advertising and publicity expenses (Article 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 whose average workforce in said period is less than 50 people are entitled to apply these deductions.

In the case of entities that form 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 turnover and average workforce shall refer to all 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 period of time that was also shorter, 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 participating entity or permanent establishment begins its economic activity, and will be subject to an increase in the average workforce in the Canary Islands of the taxpayer in that tax period with respect to the average workforce existing in the previous tax period and to maintaining said increase for a period of 3 years.

Requirements and amount of the deduction

Entities may deduct 15 percent of the investments actually made in the establishment of subsidiaries or permanent establishments in the Kingdom of Morocco, the Islamic Republic of Mauritania, the Republic of Senegal, the Republic of Gambia, the Republic of Guinea Bissau and the Republic of Cape Verde, provided that these entities carry out economic activities in said territories within 1 year from the time 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 in the equity of the subsidiary of at least 50 percent, and

  • that the investment in said participating 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 multi-year advertising and publicity expenses for the launch of products, the opening and prospecting of markets abroad and attendance at fairs, exhibitions and similar events, including in this case those held in Spain with an international character.

These deductions will be 10 percent when, not meeting the requirements set out in the first paragraph of this section, the net amount of the turnover does not exceed 50 million euros and the 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 Income Tax.

The deductions for investment of profits, for expenses and investments of forestry companies and for investments in territories of West Africa and for advertising and publicity expenses to which we have referred in the previous sections, will be computed jointly 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.