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Practical manual for Income Tax 2023.

Subjective scope and modalities

This deduction applies to taxpayers with habitual and effective residence on the island of La Palma, distinguishing between the following modalities depending on whether the period of residence is less than, equal to or greater than 3 years:

  1. Taxpayers residing on the island of La Palma for a period of less than three years

    For taxpayers who have their habitual and effective residence on the island of La Palma, the deduction consists of 60% of the part of the sum of the full state and regional contributions that proportionally corresponds to the income computed for the determination of the taxable bases that would have been obtained on the island of La Palma.

  2. Taxpayers residing on the island of La Palma for a period of three years or more

    Taxpayers who have maintained their habitual and effective residence on the island of La Palma for a period of no less than three years, in tax periods beginning after the end of that period, may apply the same deduction also for income obtained outside these cities.

    To do so, the following requirement must be met: that at least one third of the taxpayer's net assets, determined in accordance with the Wealth Tax regulations, are located in La Palma.

    The maximum amount of income obtained outside of these cities that can benefit from the deduction will be the net amount of the returns and capital gains and losses obtained in these cities.

Note: Unlike the deduction for income obtained in Ceuta and Melilla, this deduction does not apply to taxpayers who do not have habitual and effective residence on the island of La Palma, even if obtain income there.