C. Deduction for production of certain live shows (art. 36.3 LIS)

Beneficiaries of the deduction

Regulations: see also art. 39.7 LIS

1. Producers: taxpayers who produce and exhibit certain live performing arts and musical shows.

2. Funders: Since January 1, 2021, entrepreneurs or professionals who participate in the financing of the production and exhibition of live performing arts and musical shows are allowed to apply this deduction, under the same conditions as the producers who generate the right to it, when the following circumstances occur:

   • Provide amounts in the form of financing, to cover all or part of the direct artistic and technical costs of production, as well as advertising and promotion costs borne by the producer up to a limit of 30% of production costs.

     Time when financing must be provided:

     • The amounts intended to finance production costs may be contributed at any stage of production, prior to or after the moment in which the producer incurs the aforementioned production costs until obtaining the certificate referred to in letter a) of section 3 of article 36 of the LIS .

     • The amounts intended to finance expenses for obtaining copies, advertising and promotion by the producer may be contributed before or after the moment in which the producer incurs the aforementioned expenses, but never after the tax period in which the producer incurs them.

   • Do not acquire intellectual property rights or any other rights in respect of the results of production, which shall in all cases remain the property of the producer.

   • They are not linked , in the sense of article 18 of the LIS , with the taxpayer who generates the right to the deduction (the producer).

Percentage of deduction

Expenses incurred in the production and exhibition of live performing arts and musical shows will be subject to a deduction of 20 percent .

Deduction base

The basis for the deduction will be the direct costs of an artistic, technical and promotional nature incurred in the aforementioned activities.

This basis of this deduction will be reduced by the amount of the subsidies received to finance the expenses that generate the right to it.

Maximum deduction amount

• For the producer: the deduction generated in each tax period may not exceed the amount of 500,000 euros per taxpayer .

• For the funder: Although the amount of the deduction can be determined under the same conditions as those applied to the producer, provided that they have been generated by the latter, the maximum amount of the deduction will be the result of multiplying by 1.20 the amount of the amounts that have been contributed to finance the production costs and the advertising and promotion expenses borne by the producer.

  The excess deduction may be applied by the producer who has generated the right to it.

  Remember: In the case of the financier, he may apply the deduction provided for in section 1 of article 36 of the LIS when he contributes amounts intended to finance all or part of the production costs, as well as the expenses for obtaining copies, advertising and promotion at the producer's expense up to the limit of 30% of the production costs.

In short:

Requirements

The requirements necessary for the application of the deduction are:

1. The taxpayer must have a certificate to prove this, under the terms established by Ministerial Order, issued by the National Institute of Performing Arts and Music.

   See in this regard Order ECD/2836/2015, of December 18, regulating the procedure for obtaining the certificate from the National Institute of Performing Arts and Music, provided for in LIS .

2. That, of the benefits obtained in the development of these activities in the year in which the right to the deduction is generated, the taxpayer allocates at least 50 percent to carrying out activities that give the right to apply the deduction provided for in this section.

   The profit obtained, subject to reinvestment, is understood to be that derived from income directly related to the production and exhibition of the live show (ticket sales, excluding sales of drinks, merchandising products, etc.).

3. The period for compliance with this obligation will be between the beginning of the fiscal year in which the aforementioned benefits were obtained and the 4 years following the end of said fiscal year.

Limit

The amount of the deduction, together with any subsidies received by the taxpayer, may not exceed of said expenses.