1. Common rules for deductions

a) Percentages and limits for the application of Corporate Tax deductions

Regulations: Articles 68.2 and 69.2 Law Personal Income Tax

The percentage of deduction that corresponds to each type of investment and the limits (joint or specific) applicable to the deductions generated are reflected, respectively, in the table of the General Deduction Regime and in the table of the Special Deduction Regimes .

These limits are applied to the quota resulting from reducing the sum of the full state and regional quotas, in the total amount of deductions for investment in new or recently created companies and for actions for the protection and dissemination of Spanish Historical Heritage. and cities, complexes and properties declared World Heritage.

b) Deductions not applied in the year due to insufficient quota

Regulations: Art. 39.1 and twenty-fourth transitional provision LIS

Deductions from the year itself: In accordance with article 39.1 of the LIS the amounts corresponding to the tax period not deducted may be applied in the settlements of the tax periods that end in the immediate and subsequent 15 years. However, the amounts corresponding to the deduction for research and development and technological innovation activities of article 35 of the LIS may be applied in the settlements of the tax periods that end in the immediate 18 years and successive.

Deductions from previous years: the deductions provided for in Chapter IV of Title VI of Law 43/1995, of December 27, on Corporate Tax, and in Chapter IV of Title VI of the consolidated text of the Corporate Tax Law, approved by the Royal Legislative Decree 4/2004, of March 5, that were pending application at the beginning of the first tax period that begins on January 1, 2015, may be deducted from said tax period, with the requirements established in their respective applicable regulations prior to that date, within the period and with the conditions established in article 39 of the current Corporate Tax Law.

c) Cases of deferral of the calculation of deadlines

Regulations: Art. 39.1 LIS

The calculation of the deadlines for the application of deductions may be deferred until the first year in which, within the limitation period, positive results are produced, in the following cases:

1. In newly created entities.

2. In entities that clean up losses from previous years through the effective contribution of new resources, without the application or capitalization of reserves being considered as such.

d) Incompatibilities

Regulations: Art. 39.4 LIS

As a general rule, the same investment may not give rise to the application of more than one deduction by the same taxpayer unless expressly provided for, nor may it give rise to the application of a deduction in more than one taxpayer.

e) Maintenance of investments

Regulations: Art. 39.5 LIS

The assets subject to the deductions must remain in operation for 5 years or 3 years, if they are movable assets, or during their useful life if shorter.

In the case of cinematographic productions and audiovisual series, this requirement is understood to be fulfilled to the extent that the production company maintains the same percentage of ownership of the work during the period of 3 years, without prejudice to its power to fully or partially commercialize the rights of exploitation derived from it to one or more third parties.

f) Prescription of the right to verify deductions

Regulations: Art. 39.6 LIS

The right of the Administration to initiate the procedure to verify the deductions for incentives and incentives for business investment of the LIS provided for in this section applied or pending to be applied will expire after 10 years. count from the day following the day on which the established period for submitting the declaration or self-assessment corresponding to the tax period in which the right to apply was generated.

After this period, the taxpayer must prove the deductions whose application they intend to apply, by displaying the liquidation or self-assessment and the accounting, with proof of their deposit during the aforementioned period in the Commercial Registry.

g) Other general application conditions and requirements

The deductions discussed in this section are only applicable to taxpayers who carry out economic activities and determine their net income using the direct estimation method, in either of its two modalities.

However, the deductions pending to be applied from investments made in previous years in which the taxpayer has been included in the direct estimation method and has met the requirements established for this purpose, may be deducted in this declaration and until the end of the legal period. granted for this, although the regular taxpayers are covered by the objective estimation method in this exercise.

Note: taxpayers of the Personal Income Tax , partners of civil companies to which the income allocation regime had been applicable and who acquired the status of taxpayers of the Personal Income Tax as of January 1, 2016 Companies, may continue to apply in their full quota the deductions for investment in economic activities provided for in article 68.2 of the Personal Income Tax Law that were pending application on January 1, 2016 in the terms provided for in article 69 of the Personal Income Tax Law , provided that the conditions and requirements established in the LIS (transitional provision thirtieth Law are met. IRPF ##5##).