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Practical Income Manual 2020.

B. Deduction for foreign film productions in Spain (art. 36.2 LIS)

Producers registered in the Administrative Registry of Cinematographic Companies of the Institute of Cinematography and Audiovisual Arts who are responsible for the execution of a foreign production of feature films or audiovisual works that allow the preparation of a physical support prior to their industrial production. serialized, they will be entitled to a deduction for expenses incurred in Spanish territory

Basis of deduction

The basis of the deduction is made up of the following expenses incurred in Spanish territory directly related to production:

  1. The expenses of creative personnel, provided they have tax residence in Spain or in a member state of the European Economic Area, with a limit of 100,000 euros per person.
  2. Expenses deriving from the use of technical industries and other suppliers.

Deduction percentages and maximum deduction amount

The deduction amount will be:

a) In general

  • 30 percent of the first million base of the deduction.
  • 25 percent of the excess of said amount

The deduction will be applied whenever such expenses incurred in Spanish territory are at least 1 million euros. However, in the case of animation productions the amount of such expenses is established at least 200,000 euros.

The amount of this deduction may not exceed 10 million euros for each production carried out. 

Likewise, article 36.2 of the LIS also establishes that the amount of this deduction, together with the rest of the aid received by the taxpayer, may not exceed 50 percent of production cost .

b) When the producer is in charge of the execution of visual effects services and the expenses incurred in Spanish territory are less than 1 million euros: Of 30 percent of the deduction base.

The amount of this deduction may not exceed the amount established by Commission Regulation (EU) 1407/2013, of December 18, 2013, relating to the application of articles 107 and 108 of the Treaty on the Functioning of the European Union to the aids of "minimis" .

In short:

Deduction percentageMaximum amountBasis of deduction 
30%

When the producer is in charge of the execution of visual effects services and the expenses incurred in Spanish territory are less than €1 million 

It may not exceed the amount established for "minimis" aid by Regulation (EU) 1407/2013  

The following expenses incurred in Spanish territory directly related to production:

  • The expenses of creative personnel, provided they have tax residence in Spain or in a member state of the European Economic Area, with a limit of 100,000 euros per person.
  • Expenses deriving from the use of technical industries and other suppliers.
30% Up to €1 million deduction base

€10 million for each production carried out
Without exceeding 50% of the production cost

Requirement: The deduction will be applied whenever the expenses incurred in Spanish territory are at least €1 million. However, in the case of animation productions the amount of such expenses is established at least €200,000.

25% About the excess of €1 million

Limits

This deduction is excluded from the joint limit (25/50 per 100) provided for in article 39.1 LIS for deductions to encourage the performance of certain activities and, therefore, this deduction for expenses of executing a foreign production is not computed for the calculation of said limit.

Finally, keep in mind that, in case of insufficient quota in the application of this deduction of article 36.2 of the LIS , the possibility of being able to request its payment from the Administration that is granted in Article 39.3 of the LIS , is not applicable to Personal Income Tax , in accordance with the provisions of the article 68.2 of the Personal Income Tax Law