B. Deduction for foreign film productions in Spain (art. 36.2 LIS)

Note: It should be noted that, in accordance with the provisions of article 68.2 of the Personal Income Tax Law , personal income tax payers who carry out economic activities may apply this deduction of article 36.2 of LIS , with the exception of the provisions of section 3 of article 39 of LIS , that is, they may not , in the event of insufficient quota, request its payment from the Administration under the terms determined by LIS .

Producers registered in the Administrative Registry of Cinematographic Companies and Audiovisual Companies of the Institute of Cinematography and Audiovisual Arts that are responsible for the execution of a foreign production of cinematographic feature films or audiovisual works that allow the preparation of a physical support prior to serial industrial production, they will be entitled to a deduction for expenses incurred in Spanish territory .

Regarding the definition of foreign production of feature films or audiovisual works, see article 4 of Law 55/2007, of December 28, on Cinema ( BOE December 29) .

Deduction base and maximum base

Regulations: see also art. 45 Regulation IS

Deduction base

The basis for the deduction is made up of the following expenses incurred in Spanish territory directly related to production:
- The expenses of creative personnel, as long as they have tax residence in Spain or in a Member State of the European Economic Area
- Expenses deriving from the use of technical industries and other suppliers.
Note: Only productions with a minimum cost of 2 million euros generate the right to this deduction.
Maximum deduction base: 80 percent of the total production cost

Deduction percentages and maximum deduction amount

The amount of the deduction will be:

In general
- From 30 percent with respect to the first million of the deduction base.
- From 25 percent on the excess of said amount.
The deduction will be applied provided that such expenses incurred in Spanish territory are at least 1 million euros . However, in the case of animation productions, the amount of such expenses is set at least at 200,000 euros .

Maximum amount:
- The amount of this deduction may not exceed 20 million euros , for each production carried out.
- In the case of audiovisual series, the deduction will be determined per episode and the limit referred to in the previous paragraph will be 10 million euros for each episode produced.
Likewise, article 36.2 of the LIS also establishes that the amount of this deduction, together with the rest of the aid received by the taxpayer, may not exceed 50% of the cost of production .

New in 2023: The maximum amount of the deduction is increased from 10 to 20 million euros, except in the case of audiovisual series, which will be 10 million euros for each episode produced.
When the producer is responsible for the execution of visual effects services and the expenses incurred in Spanish territory are less than 1 million euros: From 30 percent of the deduction base.

The amount of this deduction may not exceed the amount established by Commission Regulation (EU) 1407/2013, of December 18, 2013, relating to the application of articles 107 and 108 of the Treaty on the Functioning of the Union to "minimis" aids .

In short:

Deduction percentage	Deduction base	Maximum amount
30% Up to €1 million of deduction base.	The following expenses incurred in Spanish territory directly related to production: Expenses for creative staff, provided that they have tax residence in Spain or in a member state of the European Economic Area. Expenses deriving from the use of technical industries and other suppliers. Maximum base: 80% of the total production cost.	In general: €20 million for each production made. For audiovisual series €10 million for each episode produced. Without exceeding together with the rest of the aid received by the taxpayer, 50% of the production cost. Requirement: The deduction will be applied provided that the expenses incurred in Spanish territory are at least €1 million. However, in the case of animation productions, the amount of such expenses is set at least at €200,000.
25% On the excess of 1 million €.
30% When the producer is responsible for the execution of visual effects services and the expenses incurred in Spanish territory are less than €1 million.	Expenses incurred in Spanish territory directly related to production: The expenses of creative personnel, as long as they have tax residence in Spain or in a Member State of the EEA. Expenses deriving from the use of technical industries and other suppliers. Maximum base: 80% of the total production cost.	It may not exceed the amount established for "minimis" aid ## by Regulation (EU) 1407/2013. Currently the amount is €200,000 over any three tax year period.

Deduction percentage

Deduction base

Maximum amount

30%

Up to €1 million of deduction base.

The following expenses incurred in Spanish territory directly related to production:

Expenses for creative staff, provided that they have tax residence in Spain or in a member state of the European Economic Area.
Expenses deriving from the use of technical industries and other suppliers.

Maximum base: 80% of the total production cost.

In general: €20 million for each production made.
For audiovisual series €10 million for each episode produced.

Without exceeding together with the rest of the aid received by the taxpayer, 50% of the production cost.

Requirement: The deduction will be applied provided that the expenses incurred in Spanish territory are at least €1 million. However, in the case of animation productions, the amount of such expenses is set at least at €200,000.

25%

On the excess of 1 million €.

30%

When the producer is responsible for the execution of visual effects services and the expenses incurred in Spanish territory are less than €1 million.

Expenses incurred in Spanish territory directly related to production:

The expenses of creative personnel, as long as they have tax residence in Spain or in a Member State of the EEA.
Expenses deriving from the use of technical industries and other suppliers.

Maximum base: 80% of the total production cost.

It may not exceed the amount established for "minimis" aid ## by Regulation (EU) 1407/2013.

Currently the amount is €200,000 over any three tax year period.

Requirements

To apply the deduction, it will be necessary to meet the following requirements:

a') That the production obtains the corresponding certificate that accredits the cultural character in relation to its content or its connection with the Spanish or European cultural reality, issued by the Institute of Cinematography and Audiovisual Arts, or by the corresponding body of the Autonomous Community with competence in the matter.

Note: it is not necessary to obtain the certificate referred to in this letter a') for the application of the deduction of 30% of the deduction base, applicable when the producer is responsible for the execution of visual effects services and the expenses incurred in Spanish territory are less than 1 million euros of article 36.2.b) LIS .

b') That a specific reference to having benefited from the tax incentive be incorporated into the final credit titles of the production; the collaboration, where appropriate, of the Government of Spain, the Autonomous Communities, the Film Commissions or the Film Offices that have been directly involved in the filming or other production processes carried out in Spain, as well as, where appropriate, the specific filming locations in Spain and, in the case of animated audiovisual works, the location of the studio that has been commissioned to provide the production service.

c') That the rights holders authorize the use of the title of the work and of graphic and audiovisual press material that expressly includes specific filming locations or any other production process carried out in Spain, for the realization of activities and the preparation of promotional materials in Spain and abroad for cultural or tourist purposes, which may be carried out by state, autonomous or local entities with powers in matters of culture, tourism and economy, as well as by the Film Commissions or Film Offices that have intervened in the filming or production.

Note: the requirements established in letters b') and c') are not applicable in the case of foreign productions of feature films and audiovisual works in which the contract by which the execution of the production was commissioned had been signed prior to July 11, 2021 , by application of the provisions of the forty-second transitional provision of the LIS .

Limits

This deduction is excluded from the joint limit (25/50 percent) provided for in article 39.1 LIS for deductions to encourage the performance of certain activities and, therefore, this deduction for expenses related to the execution of a foreign production is not included in the calculation of said limit.

Finally, please note that, in the event of insufficient quota in the application of this deduction of article 36.2 of the LIS , the possibility of being able to request its payment to the Administration that is granted in article 39.3 of the LIS , is not applicable to the IRPF , in accordance with the provisions of article 68.2 of the Law of IRPF .