A. Deduction for investments in Spanish film productions and audiovisual series (art. 36.1 LIS)

Beneficiaries of the deduction

Regulations: see art. 39.7 LIS

Since January 1, 2021, this deduction may be applied by, in addition to taxpayers who make Spanish productions of feature films, short films, and audiovisual series of fiction, animation, or documentaries ( producers ), taxpayers, businessmen or professionals, who participate in the financing of these productions made by another taxpayer ( investors ), when the latter provide amounts as financing, to cover all or part of the costs of the production without acquiring intellectual property or other rights with respect to the results thereof , the ownership of which must in all cases belong to the producer. These contributions can be made at any stage of production until the nationality certificate is obtained.

Important : In order for the investor to be eligible for this deduction, it is necessary that he/she signs a financing contract with the producer and that both communicate to the Tax Authority prior to the end of the tax period in which the deduction is generated this circumstance, providing both the signed financing contract and the certifications of compliance with the requirements demanded in article 36.1 for the application of the deduction.

To carry out this communication regulated in art. 39.7 LIS the management " Presentation of communication regulated in art. 39.7 LIS ” has been created in the electronic headquarters of the State Tax Administration Agency.

Deduction base

The basis for the deduction will be the total cost of production, as well as the costs of obtaining copies and the advertising and promotion costs borne by the producer up to the limit for both of 40 percent of the cost of production .

At least 50 percent of the deduction base must correspond to expenses incurred in Spanish territory .

In the case of a co-production, the amounts will be determined, for each co-producer, based on their respective percentage of participation in the production.

The deduction base will be reduced by the amount of the subsidies received to finance the investments that generate the right to deduction.

Deduction percentage and maximum deduction amount

a. Percentage

Investments in Spanish productions of feature films and short films and audiovisual series of fiction, animation or documentary , which allow the creation of a physical support prior to their serial industrial production will entitle the producer or taxpayers who participate in the financing (investor), to a deduction that will be:

From 30 percent with respect to the first million of the deduction base.
From 25 percent on the excess of said amount.

b. Maximum deduction amount

The amount of this deduction may not exceed 10 million euros .

Please note that until January 31, 2021 will also be considered a commercial release of a film, without it losing its status as a cinematographic film as defined in article 4.a) of Law 55/2007, of December 28, the premiere that is carried out through television audiovisual communication services, as well as electronic communication services that broadcast television channels or program catalog services [article 10 of Royal Decree-Law 17/2020, of May 5, which approves support measures for the cultural sector and of a tax nature to face the economic and social impact of COVID-2019 (BOE of the 6th) and Order CUD/807/2020, of August 27, which extends the deadline (BOE of the 31st)].

However, in the case of investor , although he may apply the deduction on the contributions disbursed in each tax period under the same conditions as if it had been applied by the producer, the maximum amount of the same may not exceed , in terms of quota, the result of multiplying by 1.20 the amount of the amounts disbursed by him for the financing of that . The excess may be applied by the producer.

Note: The accreditation of the deduction by the investor will be incompatible, totally or partially, with the deduction to which he would be entitled on the part of the producer.

Requirements

To apply the deduction established in this section, the following requirements must be met:

That the production obtains the corresponding certificate of nationality and the certificate that accredits the cultural character in relation to its content, its connection with the Spanish cultural reality or its contribution to the enrichment of the cultural diversity of the cinematographic works that are exhibited in Spain, issued by the Institute of Cinematography and Audiovisual Arts, or by the corresponding body of the Autonomous Community with competence in the matter.

These certificates will be binding on the competent tax authority in matters of accreditation and application of the above tax incentives and identification of the beneficiary producer, regardless of the time of issue thereof.
That a new and perfect copy of the production be delivered to the Spanish Film Library or the film library officially recognized by the respective Autonomous Community.

In short:

Deduction percentage	Maximum amount	Deduction base
30%	Up to €1 million	€10 million In addition, in the case of the investor, the result of multiplying by 1.20 the amount of the sums disbursed by him in each tax period for the financing of the latter. Without exceeding the limits indicated below.	(+) Total cost of production together with costs of obtaining copies, advertising and promotion costs to be borne by the producer up to a limit of 40% of the cost of production. (-) Amount of subsidies received to finance investments that generate the right to deduction.
25%	On the excess of 1 million €

Deduction percentage

Maximum amount

Deduction base

30%

Up to €1 million

€10 million

In addition, in the case of the investor, the result of multiplying by 1.20 the amount of the sums disbursed by him in each tax period for the financing of the latter.

Without exceeding the limits indicated below.

(+) Total cost of production together with costs of obtaining copies, advertising and promotion costs to be borne by the producer up to a limit of 40% of the cost of production.

(-) Amount of subsidies received to finance investments that generate the right to deduction.

25%

On the excess of 1 million €

Limits

The amount of this deduction, together with the rest of the aid received by the taxpayer, may not exceed 50% of the cost of production . However, this limit is raised to:

The 85 percent for short films.
80 percent for productions directed by a person who has not directed or co-directed more than two feature films qualified for commercial exploitation in cinema exhibition halls, whose production budget does not exceed 1,500,000 euros.
80 percent in the case of productions shot entirely in one of the co-official languages other than Spanish that are screened in Spain in said co-official language or with subtitles.
80% in the case of productions directed exclusively by persons with a degree of disability equal to or greater than 33% recognized by the competent body.
75 percent in the case of productions made exclusively by female directors.
75% in the case of productions with special cultural and artistic value that require exceptional financing support according to the criteria established by Ministerial Order or in the corresponding calls for aid.
The 75 percent in the case of documentaries.
75% in the case of animated works with a production budget not exceeding 2,500,000 euros.
60% in the case of cross-border productions financed by more than one Member State of the European Union and involving producers from more than one Member State.
60 percent in the case of international co-productions with Latin American countries.

Tax period in which the deduction is applied

We must distinguish, depending on the beneficiary of the deduction, two moments:

Producer

The deduction will be generated in each tax period for the production cost incurred in that period, although it will be applied from the tax period in which the production of the work ends.

However, in the case of animation productions, the deduction will be applied from the tax period in which the nationality certificate indicated in letter a') of article 36.1 of the LIS is obtained.
Investor

The taxpayer or taxpayers who participate in the financing of production will apply the deduction annually, based on the contributions disbursed in each tax period.