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Practical Income Manual 2020.

By investment in agricultural companies and agricultural cooperative societies or community exploitation of the land

Regulations: Art. 5. Fifteen Text Recast of the legal provisions of the Autonomous Community of Galicia regarding taxes transferred by the State, approved by Legislative Decree 1/2011, of July 28.

Amounts and maximum limit of the deduction

  • 20 percent of the amounts invested in fiscal year 2020 in the acquisition of share capital as a result of agreements to establish companies or increase capital in agricultural companies and agricultural cooperative societies or community exploitation of land .
  • With respect to the same entities , 20 percent of the amounts lent during the year, as well as the amounts guaranteed personally by the taxpayer , provided that the loan is granted or the guarantee is constituted in the year in which the company is incorporated or its capital increase .
  • The joint maximum limit of the deduction is 20,000 euros, regardless of the number of members of the family unit that satisfy the amounts that qualify for it.

Requirements and other conditions for the application of the deduction

  • The taxpayer's participation, computed together with those of the spouse or people linked by reason of kinship, in a direct or collateral line, by consanguinity or affinity up to and including the third degree, cannot be higher than 40 per 100 of the share capital of the company object of the investment , or of its voting rights, at any time and during the three years following the constitution or expansion. In the case of a loan or guarantee, the taxpayer's participation in the capital will not be necessary, but if it exists it cannot be higher than 40 percent, with the same previous limits.

    The maximum limit of participation in the share capital will not apply in the case of labor companies or cooperatives composed of only two members, as long as this circumstance remains.

  • The entity in which the investment, loan or guarantee must be made must meet the following requirements:

    1. It must have the registered and tax domicile in Galicia and maintain it for the three years following the constitution or expansion.
    2. It must have as its exclusive corporate purpose: agricultural activity .

      The term "agricultural activity" will be defined in Law 19/1995, of July 4, on the modernization of agricultural holdings.

      The agricultural holding must be registered in the Registry of Agricultural Holdings of Galicia.

  • The operations in which the deduction is applicable must be formalized in a public deed in which the identity of the taxpayers who intend to apply this deduction and the amount of the respective operation must be specified.
  • The acquired shares must be maintained in the taxpayer's assets for a minimum period of three years following the incorporation or expansion.

    In the case of loans , these must refer to financing operations with a term greater than or equal to five years , without the possibility of amortizing a amount greater than 20 percent per year of the principal amount lent.

    In the case of guarantees , these will extend to for the entire duration of the guaranteed operation, and cannot be lower five years .

Incompatibility

This deduction is incompatible with the deductions “For investment in the acquisition of shares or stakes in new or recently created entities”, “For investment in the acquisition of shares or stakes in new or recently created entities and their financing” and “By investment in shares of entities listed in the segment of expanding companies of the alternative stock market” included in numbers nine, ten and eleven of article 5 of Legislative Decree 1/2011.

The incompatibility refers to the same investment, that is, for each investment only one deduction can be applied (at the taxpayer's option), but nothing prevents the corresponding deduction from being applied to each of them if several different investments are made. .

Note: Taxpayers entitled to this deduction must complete the section "Additional information to the autonomous deduction of Galicia for investment in agricultural companies and agricultural cooperative societies or community exploitation of land" of Annex B.7) of the declaration in which, In addition to the amount of the investment with the right to deduction, the NIF of the entity in which the investment is made, the loan is granted or the guarantee is constituted must be stated and, if it exists , that of the second entity, indicating the total amount of the deduction in the corresponding box.