Freedom of amortization with job creation

Regulations: Art. 102 LIS

Requirements

Owners of economic activities whose net performance is determined by direct estimation, in either of its two modalities, and in which each and every one of the requirements listed below are met, may benefit from this incentive.

1. That the economic activity has the tax consideration of a small company in the year in which the investment is made .

   For these purposes, the investment will be deemed to have been made when the assets are made available to the owner of the activity.

2. That they are new elements of tangible fixed assets and real estate investments, assigned to economic activities , made available to the taxpayer in the tax period in which the economic activity is considered a reduced-value company dimension. 

   The investment may also be made in elements commissioned under a work execution contract signed in the tax period, provided that they are made available within 12 months following its conclusion.

   The investment may also be made in elements of tangible fixed assets and real estate investments built by the company itself, provided that the completion of the construction takes place within the following 12 months or in the tax period in which the economic activity is considered small company.

   If new property, plant and equipment and investment property are acquired through a financial lease contract, the purchase option will need to be exercised.

3. That during the 24 months following the date of the beginning of the tax period in which the acquired assets come into operation, the total average workforce of the company is increased with respect to the average workforce of the previous 12 months, and said increase is maintained for a additional period of another 24 months.

   To calculate the total average workforce of the economic activity and to determine the increase, the people employed will be taken in the terms provided by labor legislation, taking into account the contracted day in relation to the full day. Workers with an indefinite contract, limited duration, temporary, apprenticeship, training and part-time contracts should therefore be included.

4. That the maximum amount of the investment that is freely amortized does not exceed the amount resulting from multiplying the figure of 120,000 euros by the increase in the total average workforce of the economic activity calculated with two decimal places.

   If each and every one of the above requirements is met, the freedom of amortization may be applied from the entry into operation of the elements eligible for it.

Incompatibility

Contracted workers who give the right to the deduction for job creation for workers with disabilities (article 38 of the LIS ) will not be counted for the purposes of the freedom of amortization with job creation for companies small dimension of article 102 of the LIS . Contracted workers who give the right to one of the deductions provided for in article 37 of LIS (deductions for job creation) will not be counted either.

Consequences of failure to comply with the obligation to increase or maintain the workforce

In the event that after the application of the tax benefit the obligation to increase or maintain the workforce is not met, the full amount corresponding to the excess deducted amount must be paid, plus the corresponding late payment interest. The payment of the aforementioned fee and late payment interest will be made together with the self-assessment corresponding to the tax period in which one or another obligation has been breached.

Note: The freedom of amortization for low-value investments that the previous consolidated text of the Corporate Tax Law regulated in its article 110 only for small-sized entities has been replaced in the current LIS by a similar benefit applicable to all taxpayers of the aforementioned tax.