Skip to main content
Practical Income Manual 2021.

By investment in the acquisition of shares or social participations of new or recently created entities

Regulations: Art. 7 of the Consolidated Text of the Legal Provisions of the Autonomous Community of the Balearic Islands regarding Taxes Transferred by the State, approved by Legislative Decree 1/2014, of June 6.

Amounts and maximum limit of the deduction

1. In general terms

  • 30 percent of the amounts invested during the year in the acquisition of shares or participations as a result of agreements to establish companies or increase capital in entities that have the nature of a Public Limited Company , Limited Company, Labor Limited Company or Labor Limited Company, with the limit of 6,000 euros per year .

  • In the case of joint declaration , the maximum amount of deduction will be 6,000 euros for each taxpayer of the family unit that has made the investment.

  • This deduction will be applied in the year in which the investment materializes and in the two following with the limit of 6,000 euros per year.

    Once the investment is made, the right to deduct 30% of the amount invested is generated, with a maximum limit of 6,000 euros per year, in the year in which the investment is made and in the following two years.

    If you are entitled to apply the deduction for investments made in different years, it will be applied following the order of seniority. For investments made in 2019, 2020 or 2021, the single limit will be 6,000 euros.

    The total deduction applied cannot exceed 6,000 euros per taxpayer.

2. For investments carried out in companies owned by research centers or universities

  • 50 percent of the amounts invested in companies owned by research centers or universities with a maximum amount of 12,000 euros per year and per taxpayer.

Note: This limit is not independent of the general limit of 6,000 euros. Therefore, in the event that a taxpayer makes investments in companies owned by research centers or universities and other investments in the acquisition of shares or corporate interests in new or recently created entities, the maximum deduction limit will be 12,000 euros.

Requirements and other conditions for the application of the deduction

  1. The taxpayer's participation, computed together with those of the spouse or persons linked by reason of kinship, in a direct or collateral line, by consanguinity or affinity up to the third degree included, cannot exceed 40 percent of the capital social of the company object of the investment or voting rights in the company.
  2. The entity in which the investment must materialize must meet the following requirements :

    1. It must be a Public Limited Company, Limited Company, Labor Limited Company or Labor Limited Company .

    2. Have your social and tax domicile in the Balearic Islands .

    3. Develop an economic activity, without the main activity being the management of movable or real estate assets , in accordance with the provisions of article 4.8.2.a) of Law 19/ 1991, of June 6, of the Wealth Tax, nor engage in the activity of leasing real estate.

    4. Must, at least, employ a person domiciled for tax purposes in the Balearic Islands with a full-time employment contract, registered in the general Social Security regime and who is not a partner or participant in the society.

    5. If the investment has been made through a capital increase, company must have been established in the two years prior to the date of this increase unless it is an innovative research company. and development that, in accordance with the provisions of Order ECC /1087/2015, of June 5, which regulates obtaining the small and innovative medium-sized company and the Registry of Innovative Small and Medium-sized Enterprises is created and regulated, has this seal in force and is registered in said registry.

    6. You must maintain jobs . For this purpose, this requirement will be considered to be met when the total average workforce is maintained, in terms of people per year regulated by labor regulations, calculated as provided in article 102 of Law 27/2014 on Corporate Tax.

    7. The annual turnover of the entity may not exceed the limit of 2,000,000 euros , calculated as provided in article 101 of Law 27 /2014 of Corporate Tax.

  3. The taxpayer may be part of the board of directors of the company in which the investment has materialized, but may under no circumstances perform executive or management functions. Nor may you maintain an employment relationship with the entity that is the object of the investment.

  4. The operations in which the deduction is applicable must be formalized in a public deed , in which the identity of the investors and the amount of the respective investment will be specified.

  5. The acquired shares must be maintained in the taxpayer's assets for a minimum period of four years .

  6. The requirements established in points 2, 3, 4, 6 and 7 of letter b above and the maximum participation limit established in letter a, as well as the prohibition contained in letter c, must be met during a minimum period of four years counting from the date of effectiveness of the capital increase agreement or constitution of the entity that gives rise to the right to the deduction.

Loss of the right to the deduction made

Failure to comply with the requirements and conditions established in letters a, c, e and f above entails the loss of the tax benefit, and the taxpayer must include in the tax return corresponding to the year in which the non-compliance occurred the part of the tax that has stopped being paid as a consequence of the deduction made, together with the accrued late payment interest.

Important: Taxpayers entitled to the deduction must complete the section "Additional information to the regional deduction for investment in the acquisition of shares and social participations in new or recently created entities" of the corresponding annex B.8 of the declaration model in which , in addition to the amount of the investment with the right to deduction, the NIF of the newly or recently created entity must be stated and, if it exists, that of the second entity, also indicating the amount total of the deduction for investments in new or recently created companies.