A. Deduction for investments in Spanish film productions and audiovisual series (art. 36.1 LIS)

Deduction beneficiaries

Regulations: see also art. 39.7 LIS

Producers: taxpayers who make Spanish productions of feature films and short films and audiovisual fiction, animation or documentary series.
Financiers: Since January 1, 2021, they are allowed to apply this deduction, under the same conditions as the producers who generate the right to it, businessmen or professionals, who participate in the financing of Spanish productions of feature films, short films, series audiovisual fiction, animation or documentary, when the following circumstances occur:
- That they contribute amounts as financing, to cover all or part of the production costs as well as the expenses for obtaining copies, advertising and promotion by the producer up to the limit of 30 percent of production costs.
  When the 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 the certificates referred to in letter a') of section 1 of article 36 of the LIS .
  - The amounts intended to finance expenses for obtaining copies, advertising and promotion by the producer may be contributed prior to or after the moment in which the producer incurs the aforementioned expenses, but never after of the tax period in which the producer incurs them.
- That they do not acquire intellectual or other property rights regarding the results of production , whose property must in all cases belong to the producer.
- That are not linked , within the meaning of article 18 of the LIS , with the taxpayer who generates the right to deduction (the producer).

Important : the producer and the taxpayers who participate in the financing ( financiers ) of the production must sign one or more financing contracts, which may also be signed at any stage of the production being necessary that both communicate to the Tax Administration prior to the end of the tax period in which the latter (producer) has the right to apply the deduction this circumstance, providing both the signed financing contract and the certifications of compliance with the requirements demanded in article 36.1 for the application of the deduction.

To carry out this communication regulated in art. 39.7 LIS the management " Presentation of communication regulated in article 39.7 LIS " has been created in the electronic headquarters of the State Tax Administration Agency .

Basis of deduction

The basis of the deduction will be constituted by the total cost of production, as well as the expenses for obtaining copies and the advertising and promotion expenses borne by the producer up to the limit for both of 40 percent of production cost .

At least 50 per 100 of the base of the deduction must correspond to expenses incurred in Spanish territory .

In the case of a co-production, the amounts will be determined, for each co-producer, based on their respective percentage of participation in it.

The base of the deduction will be reduced by the amount of subsidies received to finance the investments that generate the right to deduction.

Deduction percentage and maximum deduction amount

a. Percentage

Investments in Spanish productions of feature films and short films and audiovisual series of fiction, animation or documentaries , which allow the preparation of a physical support prior to their serial industrial production, will entitle the producer or taxpayers who participate in the financing (financer), to a deduction that will be:

Of 30 per 100 with respect to the first million base of the deduction.
Of 25 per 100 on the excess of said amount.

b. Maximum deduction amount

For the producer: The amount of this deduction may not exceed 10 million euros .
For the financier: Although you can determine the amount of the deduction under the same conditions that would have been applied to the producer, provided that they have been generated by the latter, the maximum amount of the same will be the result of multiplying the amount by 1.20 of the amounts that has contributed to finance the aforementioned production costs and the expenses for obtaining copies, advertising and promotion at the expense of the product.

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 borne by the producer up to a limit of 30 percent of the production costs.

Requirements

To apply the deduction established in this section, it will be necessary to meet the following requirements:

That the production obtains the corresponding certificate of nationality and the certificate that accredits the cultural character in relation to its content, its connection with the Spanish cultural reality or its contribution to the enrichment of the cultural diversity of the cinematographic works that are exhibited in Spain, issued by the Institute of Cinematography and Audiovisual Arts, or by the corresponding body of the Autonomous Community with jurisdiction in the matter.

In relation to the nationality certificate, see article 5 of Royal Decree 1084/2015, of December 4, in development of the provisions of article 5 of Law 55/2007, on Cinema.

These certificates will be binding for the competent tax administration in matters of accreditation and application of the previous tax incentives and identification of the beneficiary producer, regardless of the moment of their issuance.
That a new and in perfect condition copy of the production be delivered to the Spanish Film Library or the film library officially recognized by the respective Autonomous Community.

In short:

Deduction percentage	Maximum amount	Basis of deduction
30%	Up to €1 million	€10 million Furthermore, in the case of the financier, the result of multiplying by 1.20 the amount of the amounts contributed to finance the production costs or the expenses for obtaining copies, advertising and promotion at the expense of the product. Without exceeding the limits indicated below	(+) Total production cost together with expenses for obtaining copies, advertising and promotion expenses borne by the producer up to a limit of 40% of the production cost. In the case of the financier, production costs and expenses for obtaining copies, advertising and promotion are borne by the producer up to a limit of 30% of production costs. (-) Amount of subsidies received to finance investments that generate the right to deduction.
25%	About the excess of €1 million

Deduction percentage

Maximum amount

Basis of deduction

30%

Up to €1 million

€10 million

Furthermore, in the case of the financier, the result of multiplying by 1.20 the amount of the amounts contributed to finance the production costs or the expenses for obtaining copies, advertising and promotion at the expense of the product.

Without exceeding the limits indicated below

(+) Total production cost together with expenses for obtaining copies, advertising and promotion expenses borne by the producer up to a limit of 40% of the production cost.

In the case of the financier, production costs and expenses for obtaining copies, advertising and promotion are borne by the producer up to a limit of 30% of production costs.

(-) Amount of subsidies received to finance investments that generate the right to deduction.

25%

About the excess of €1 million

Limits

The amount of this deduction, together with the rest of the aid received by the taxpayer, may not exceed 50 percent of the production cost . However, this limit is raised to:

The 85 percent for short films.
80 per 100 for productions directed by a person who has not directed or co-directed more than two feature films qualified for commercial exploitation in cinema exhibition halls, whose production budget does not exceed 1,500. 000 euros.
80 per 100 in the case of productions shot entirely in one of the co-official languages other than Spanish that are projected in Spain in said co-official language or with subtitles.
80 percent in the case of productions directed exclusively by people with a degree of disability equal to or greater than 33 percent recognized by the competent body.
75 percent in the case of productions made exclusively by female directors.
75 per 100 in the case of productions with a special cultural and artistic value that need exceptional financing support according to the criteria established by Ministerial Order or in the corresponding calls for aid.
75 percent in the case of documentaries.
75 per 100 in the case of animation works whose production budget does not exceed 2,500,000 euros.
60 per 100 in the case of cross-border productions financed by more than one Member State of the European Union and in which producers from more than one Member State participate.
60 per 100 in the case of international co-productions with Ibero-American countries.

Tax period in which the deduction is applied

The deduction will be generated in each tax period for the production cost incurred therein, although it will be applied from the tax period in which the production of the work ends.

However, in the case of animation productions, the deduction will be applied from the tax period in which the nationality certificate indicated in letter a') of article 36.1 of the LIS is obtained. ##1##.

Note: l the application of the deduction by the taxpayer who participates in the financing will be incompatible , totally or partially, with the deduction which the producer would have the right to.