b) Requirements for the application of the deduction

To apply this deduction, the following requirements must be met:

• Taxpayers in direct estimation

  Regulations: number 13 of the Seventieth Additional Provision. Four Law 31/2022, of December 23, on the General State Budget for the year 2023

  The taxpayer is required to determine the net income from its economic activity using the direct estimation method.

• Separate accounting of the allocation for the investment reserve and information that must be included in the annual accounts or in the investment assets register

  Regulations: numbers 3 and 12 of the Seventieth Additional Provision. Four Law 31/2022, of December 23, on the General State Budget for the year 2023

  The investment reserve is required be accounted for separately and not be used as long as the assets in which it is materialized must remain in the company.

  In addition, taxpayers must record the accounts report the information detailed in number 12 of the Seventieth Additional Provision. Four Law 31/2022.

  Taxpayers who are not required to keep annual accounts must keep a record book of investment assets, which will include said information.

• Establishments located in the Balearic Islands

  The income obtained must come from activities carried out through establishments located in the Balearic Islands.

• Maximum term of 3 years for the materialization of reservation for investments .

  Regulations: number 4 of the Seventieth Additional Provision. Four Law 31/2022, of December 23, on the General State Budget for the year 2023

  The amounts allocated to said reserve are required to be materialized within a maximum period of three years, counted from the date of accrual of the tax corresponding to the year in which it was provided.

• Materialization in specifically established investments.

  Regulations: number 4 of the Seventieth Additional Provision. Four Law 31/2022, of December 23, on the General State Budget for the year 2023.

  It is required that said materialization be carried out in one of the investments detailed below, in a specific section " Investments where the amounts destined for the RIB must be materialized " of this Chapter.

• Situation and use of the heritage elements in which the investment is materialized in the Balearic archipelago

  Regulations: number 5 of the Seventieth Additional Provision of Law 31/2022, of December 23, on the General State Budget for the year 2023.

  The assets in which the investment is made are required to meet the following conditions:

  • are located or are received in the Balearic archipelago ,
  • be used in the Balearic archipelago,
  • are affected by and necessary for the development of the taxpayer's economic activities, except in the case of those that contribute to the improvement and protection of the Balearic environment.

  To this end, number 5 of Section Four of the Seventieth Additional Provision of Law 31/2022 determines which elements will be understood to be located and used in the archipelago.

  In accordance with the aforementioned number 5 of section Four of the Seventieth Additional Provision of Law 31/2022, the following shall be deemed to be located and used in the archipelago:

  1. Aircraft whose destination contributes to improving connections between the Balearic Islands, under the terms determined by regulation.

  2. Ships flying the Spanish flag and with a home port in the Balearic Islands./li>

  3. The transport and communications networks that connect the Balearic archipelago with the outside world, both the section of the same that is within the territory of the Balearic Islands and the part located outside of it that is used to connect the different islands of the archipelago with each other.

  4. Computer applications and industrial property rights, which are not merely distinctive signs of the taxpayer or their products, and which are to be applied exclusively in production processes or commercial activities carried out within the Balearic territorial area, as well as intellectual property rights that are subject to reproduction and distribution exclusively within the Balearic archipelago.

  5. Administrative concessions for the use of public domain assets located in the Balearic Islands./li>

  6. Administrative concessions for the provision of public services that are carried out exclusively in the archipelago./li>

  7. Administrative concessions for public works for the execution or operation of public infrastructures located in the Balearic Islands.

• Maintaining investment

  Regulations: number 8 of the Seventieth Additional Provision. Four Law 31/2022, of December 23, on the General State Budget for the year 2023.

  The assets in which the investment reserve has been materialized are required to be maintained for the following periods:

  1. When it concerns patrimonial elements of tangible or intangible fixed assets referred to in letter A of number 4 of the Seventieth Additional Provision. Four of Law 31/2022, as well as the assets acquired under the provisions of letter C of that same number, must remain in operation in the company of the same taxpayer for:

     • In general: at least five years, without being transferred, leased or assigned to third parties for use.

     • In the case of land acquisition : Ten years minimum

     For the purposes of calculating the maintenance period it must taken into account that materialization will be deemed to have occurred, even in cases of acquisition through financial leasing, at the time when the assets become operational.

     When the useful life of the assets is less than said period , this requirement will not be considered breached when another asset is acquired to replace it at its net book value, within 6 months of its removal from the balance sheet, which meets the requirements for the application of the deduction and which remains in operation for the time necessary to complete said period.

     Now , in no case may it be understood that this new acquisition implies the materialization of the amounts destined to the reserve for investments in the Balearic Islands, except for the amount thereof that exceeds the net book value of the asset that is replaced and that was considered the materialization of the reserve regulated in this section.

     In cases of loss of the asset it must be replaced under the terms set out in the previous paragraph.

  2. When it concerns the values referred to in letter C of number 4 of the Seventieth Additional Provision. Four of Law 31/2022, must remain in the taxpayer's assets for five uninterrupted years , without the rights of use or enjoyment associated with them being able to be transferred to third parties.

• Other requirements:

  Regulations: number 8 of the Seventieth Additional Provision. Four Law 31/2022, of December 23, on the General State Budget for the year 2023

  • Taxpayers engaged in the economic activity of leasing or transferring fixed assets to third parties for their use may enjoy the investment reserve, provided that there is no direct or indirect link with the lessees or assignees of said assets, in the terms defined in article 18.2 of the LIS , nor are they financial leasing operations.

  • In the case of leasing of real estate , in addition to the conditions provided for in the previous paragraph, those specifically established for these cases in number 8 of the Seventieth Additional Provision must be met. Four of Law 31/2022,

    For these purposes, it will be understood that the leasing of real estate is carried out as an economic activity only when the circumstances provided for in article 27.2 of the Personal Income Tax Law occur (that is, when a person with an employment contract and full-time work schedule is available for the organization of the activity).