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Practical Income Manual 2022.

A. Deduction for Research and Development activities (art. 35.1 LIS)


Regulations: Art. 35.1.a) LIS

Article 35.1.a) of the LIS defines research and development in the following terms:

  • Research is considered to be an original planned inquiry that seeks to discover new knowledge and greater understanding in the scientific and technological field.

  • Development is considered to be the application of research results or any other type of scientific knowledge for the manufacture of new materials or products or for the design of new processes or production systems, as well as for the substantial technological improvement of materials, pre-existing products, processes or systems.

Furthermore, the aforementioned section specifically considers the following activities as research and development activities that give the right to practice this deduction:

  • The materialization of new products or processes in a plan, scheme or design, as well as the creation of a first non-marketable prototype and initial demonstration projects or pilot projects, provided that these cannot be converted or used for industrial applications or for their commercial exploitation.

  • The design and creation of a collection of samples in order to launch new products. For these purposes, the launch of a new product will be understood as its introduction into the market and as a new product, one whose novelty is essential and not merely formal or accidental.

  • The creation, combination and configuration of advanced software, using new theorems and algorithms or operating systems, languages, interfaces and applications aimed at elaborating products, processes or new or substantially improved services. Software designed to facilitate access to information society services for people with disabilities fall under this concept when they are carried out not for profit. Standard or routine activities related to software maintenance and minor updates are not included.

Deduction base

Regulations: Art. 35.1.b) LIS

The basis of the deduction is constituted by the amount of research and development expenses and, where applicable, by investments in tangible and intangible assets, excluding buildings and land.

For these purposes, research and development expenses will be considered to be those incurred by the taxpayer, including the depreciation of the assets used for the aforementioned activities, as long as they are directly related to the aforementioned activities and are effectively applied to the performance of these, stating specifically individualized by projects.

Accuracy : The concept of expense is none other than expense in accounting terms; That is, the deduction base is the accounting expenses of the year applied to the research and development activity, so the excess of tax depreciation over the accounting depreciation, derived from the rules on freedom of depreciation corresponding to investments made in assets applied to these activities.

The base of the deduction will be reduced by the amount of the subsidies received to promote said activities, and are taxed as income during the tax period.

The research and development expenses that make up the basis of the deduction must correspond to activities carried out in Spain or in any Member State of the European Union or the European Economic Area.

Likewise, the amounts paid to carry out said activities in Spain or in any Member State of the European Union or the European Economic Area, at the request of the taxpayer, individually or in collaboration with other entities, will be considered research and development expenses.

The investments will be understood to have been made when the capital assets are put into operating condition.

Deduction percentages

Regulations: Art. 35.1.c) LIS

The deduction percentages are:

  • In general, 25 per 100 of the expenses incurred in the tax period for this concept.

    However, in the event that the expenses incurred in carrying out research and development activities in the tax period are greater than the average of those incurred in the previous 2 years, 25 per 100 will be applied ##1##up to said average, and 42 per 100 over the excess with respect to this.

    In addition, an additional deduction of 17 per 100 of the amount of the entity's personnel expenses corresponding to qualified researchers assigned exclusively to research and development activities may be made.

  • 8 percent of investments in elements of tangible and intangible assets, excluding buildings and land, provided that they are exclusively used for research and development activities.

Likewise, it is required that the elements in which the investment is materialized remain in the taxpayer's assets, except for justified losses, until they fulfill their specific purpose in research and development activities, except that their useful life in accordance with the amortization method, accepted in letter a) of article 12.1 of the LIS , which applies, is lower.

In short:

Deduction percentageBasis of deduction 
25% Expenses for the period on R&D, up to the average of the previous 2 years. 
42% Expenses for the period on R&D, over the excess compared to the average of the previous 2 years.
17% Personnel expenses for qualified R&D researchers.
8% Investments related to R&D (except buildings and land).