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

Beneficiaries of the deduction

Regulations: see also art. 39.7 LIS

1. Producers: taxpayers who produce Spanish feature films, short films, and audiovisual fiction, animation, or documentary series.

   The keys to delimiting the concept of producer, for the purposes of this deduction, are:

   • Initiative: understood as the ability to decide on the execution of the work and its invoice (the term understood not as a document that reflects a price but as the workmanship or way of definitively capturing the work);

   • Responsibility or assumption of production risk;

   • Ownership of the rights derived from the ownership of the audiovisual work.

   Criterion established in Resolution of TEAC of March 12, 2020 (claim no. 00/04680/2017/00/00) and reiterated in Resolution of TEAC of 09-22-2022 (claim no. 00/00530/2022/00/00)

2. Funders: Since January 1, 2021, entrepreneurs or professionals who participate in the financing of Spanish productions of feature films, short films, audiovisual fiction series, animation or documentaries are allowed to apply this deduction, under the same conditions as the producers who generate the right to it, when the following circumstances occur:

   • That they provide amounts in the form of financing, to cover all or part of the production costs, as well as the costs of obtaining copies, advertising and promotion at the expense of the producer up to the limit of 30% of the production costs.

     Time when 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 obtaining 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 before or after the moment in which the producer incurs the aforementioned expenses, but never after the tax period in which the producer incurs them.

   • That they do not acquire intellectual property rights or any other rights regarding the results of production , the ownership of which must in all cases belong to the producer.

   • That they are not linked , in the sense of article 18 of the LIS , with the taxpayer who generates the right to the deduction (the producer).

Deduction base

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

At least 50 percent of the deduction base 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 the production.

The deduction base will be reduced by the amount of the 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 documentary , which allow the creation of a physical support prior to their serial industrial production will entitle the producer or taxpayers who participate in the financing (financier) to a deduction that will be:

• From 30 percent with respect to the first million of the deduction base.

• From 25 percent on the excess of said amount.

As regards the definition of Spanish productions of feature films and short films and audiovisual series of fiction, animation or documentary, see article 4 of Law 55/2007, of December 28, on Cinema ( BOE December 29).

b. Maximum deduction amount

• For the producer: 

  • In general, the amount of this deduction may not exceed 20 million euros .

  • 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.

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

• For the funder: although the amount of the deduction may be determined under the same conditions as those 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 by 1.20 the amount of the sums 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 at the producer's expense up to the limit of 30% of the production costs.

Requirements

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

1. 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 competence in the matter.

   Regarding the certificate of nationality, 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 on the competent tax authority in matters of accreditation and application of the above tax incentives and identification of the beneficiary producer, regardless of the time of issue thereof.

2. That a new and perfect copy of the production be delivered to the Spanish Film Library or the film library officially recognized by the respective Autonomous Community.

In short:

Limits

1. General limit: 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 .

2. Increased limits

   However, this limit is raised to:

   • The 85 percent for short films.

   • 80 percent 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 percent in the case of productions shot entirely in one of the co-official languages other than Spanish that are screened in Spain in said co-official language or with subtitles.

   • 80% in the case of productions directed exclusively by persons with a degree of disability equal to or greater than 33% recognized by the competent body.

   • 75 percent in the case of productions made exclusively by female directors.

   • 75% in the case of productions with special cultural and artistic value that require exceptional financing support according to the criteria established by Ministerial Order or in the corresponding calls for aid.

   • The 75 percent in the case of documentaries.

   • 75% in the case of animated works whose production budget does not exceed 2,500,000 euros.

   • 60% in the case of cross-border productions financed by more than one Member State of the European Union and involving producers from more than one Member State.

   • 60 percent in the case of international co-productions with Latin American countries.