C) Investments where the amounts allocated to the IRC must materialize
Regulations: Article 27,4 of Act 19/1994, of 6 July, amending the Canary Islands Economic and Tax Regime
The amounts allocated to the Canary Islands investment reserve must be in one of the following investments:
Article 27.4.A: initial investments consisting, among others, of the acquisition of new equity elements of the tangible or intangible fixed assets as a result of:
- Creation of an establishment.
- The extension of a establishment.
- The diversification of the activity of a establishment for the preparation of new products.
- Substantial transformation in the production process of a establishment.
Under no circumstances may the reservation for investments in the Canary Islands be made in the acquisition of properties for holiday homes.
Investments in land, whether built or not, are also considered as initial, provided that they meet the requirements established in the aforementioned legal provision.
In the case of taxpayers who meet the conditions of article 101 of Act 27/2014 of 27 November on the Tax companies to be considered as entities of a reduced size, in the tax period in which the profit charged to which the reserve is provided is obtained , the investment may consist of the acquisition of used fixed assets, provided that the acquired assets have not benefited from the reserves for investments in the Canary Islands, treated as land, the conditions set out in this letter A of article 27,4 of Act 19/1994 must be met.
Article 27.4.B: creation of jobs directly related to investments provided for in point A), which occur within a period of six months from the date of entry into operation of this investment and meet certain requirements for increasing the workforce.
Article 27.4.B bis: creation of jobs carried out in the tax period that cannot be considered as an initial investment due to not bringing together one of the requirements set out in Article 27 (B), with the limit of 50% of the provisions made by the taxpayer to the Reserve in the tax period. 100
Article 27.4.C: acquisition of equity elements of the tangible or intangible fixed asset that cannot be considered as an initial investment due to not collecting any of the conditions established in point A) above, as well as the investment in assets that contribute to the improvement and protection of the environment in the Canary Islands, as well as any research and development expenses that are determined by regulations.
Under no circumstances may the reservation for investments in the Canary Islands be made in the acquisition of properties for holiday homes
Article 27.4.D: Subscription of the following securities:
1. Shares or holdings in the capital issued by companies as a result of their incorporation or capital increase in the archipelago, provided that the requirements established in the aforementioned legal provision are met.
2. Shares or holdings in the capital issued by entities in the Canary Islands Special Zone as a result of their incorporation or capital increase, provided that the legally established requirements and conditions are met.
3. Any financial instrument issued by financial institutions provided that the funds collected in order to materialize the Reserve are intended for financing in the Canary Islands of private projects, whose investments are suitable in accordance with the provisions of this article, provided that the issues are supervised by the Government of the Canary Islands , and have a binding report from the Tax Agency.
4. Securities of public debt of the Autonomous Community of the Canary Islands, of the Canary Islands Local Corporations or of their public companies or Autonomous Bodies , provided that it is used to finance investments in infrastructure and equipment or to improve and protect the environment in the Canary Islands, with the limit of 50 per cent of the allowances made in each financial year. 100
5. Securities issued by public bodies that are used to build or operate infrastructures or public facilities for public administrations in the Canary Islands, when the financing obtained with this issue is exclusively used for this construction or operation, with the limit of 50% of the allowances made in each financial year. 100
6. Securities issued by entities that are the result of the construction or operation of infrastructures or public facilities for the Public Administrations in the Canary Islands, a once the corresponding administrative concession or administrative title has been obtained, when the financing obtained with this issue is exclusively allocated to such construction or operation , with the limit of 50% of the allowances made in each financial year and under the terms provided for in the regulations. 100 The issuance of the corresponding securities will be subject to administrative authorization by the competent Administration for the granting of the corresponding administrative certificate of residence.
Note: Please note that sections 2, 4.A) and C), 5, 8 and 12 of article 27 of Act 19 / 1994, of 6 July, were amended for the tax periods beginning from 7 November 2018, by the Article one. thirty and four of Act 8/2018, of 5 November, amending Act 19 / 1994, of 6 July, amending the Canary Islands Economic and Tax Regime (Official State Gazette of 20).