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Practical manual for Income Tax 2022.

For investment in social economy entities

Regulations: Art. 12 septies of Law 8/2013, of November 21, of the Autonomous Community of Castilla-La Mancha, on Tax Measures

Amount and maximum limit of the deduction

  • 20% of the amounts invested during fiscal year in contributions made for the purpose of becoming a member in entities that form part of the social economy.

  • The deduction limit applicable is 4,000 euros per year per taxpayer.

Requirements and other conditions for the application of the deduction

To apply the deduction, the following requirements and conditions must be met:

  • The participation achieved by the taxpayer as a result of the contribution made, computed together with the participation held in the same entity by his/her spouse or persons related to the taxpayer by reason of kinship up to the third degree included, in a straight or collateral line, by consanguinity or affinity, cannot exceed 40% of the total share capital of the entity that is the object of the investment or its voting rights .

  • That the entity in which the investment is to be made meets the following requirements:

    1. That forms part of the social economy, under the terms provided for in Law 5/2011, of March 29, on the Social Economy.

    2. That it has its registered office and tax domicile in the Community of Castilla-La Mancha .

    3. That it has, at least , one person employed with a full-time employment contract, and registered in the general Social Security system.

  • The operations that generate the right to the deduction must be formalized in a public deed, in which the identity of the investors and the amount of the respective investment will be recorded.

  • That said contributions remain in the assets of the taxpayer for a minimum of five years from the contribution .

  • The requirements to be met by the entity in which the investment is to be made must be met for a minimum period of years from the date of the contribution.

Loss of the right to the deduction made

Failure to comply with the above requirements and conditions, except for those relating to the formalisation of operations in a public deed, entails the loss of the tax benefit and, in such case, the taxpayer must include in the IRPF declaration corresponding to the year in which the failure to comply occurred the part of the tax that was not paid as a result of the deduction made, together with any accrued late payment interest.

Incompatibility

This deduction will be incompatible, for the same investments, with the deduction "For investment in the acquisition of shares and corporate interests as a result of agreements to form companies or increase capital in commercial companies" discussed above.

Note: taxpayers entitled to the deduction must complete section "Additional information on the regional deduction for investments or donations to Social Economy entities established in Aragon, Cantabria and Castilla-La Mancha" of Annex B.8 of the declaration in which, in addition to the amount of the investment entitled to deduction, the NIF of the entity and, if applicable, of the second entity must be stated, indicating the amount of the investment entitled to the deduction in the corresponding box.