Deduction for investment of profits (previous art. 37 TRLIS)

The twenty-fourth transitional provision of the LIS , establishes in its section 5 that “The income subject to the deduction for investment of profits provided for in article 37 of the consolidated text of the Corporate Tax Law , as worded in force in tax periods beginning before January 1, 2015, shall be governed by the provisions therein and in its implementing regulations, even when the investment and the other requirements occur in tax periods beginning on or after January 1, 2015”.

Regarding the LIS see Law 27/2014, of November 27, on Corporate Tax.

For these purposes, the aforementioned article 37 TRLIS indicated in its section 2 that : “The investment in assets related to economic activities must be made within the period between the beginning of the tax period in which the profits to be invested are obtained and the following two years or, exceptionally, in accordance with a special investment plan approved by the tax authorities at the proposal of the taxpayer”, and in its section 3 that “The deduction will be applied to the entire amount corresponding to the tax period in which the investment is made”.

In accordance with the above, for 2023 the net income from economic activities for the 2014 tax period that, in 2023, is invested in new items of tangible fixed assets or real estate investments, exceptionally, in accordance with a investment plan approved by the tax authorities at the proposal of the taxpayer, may give rise to the application of the investment deduction in article 37 of the revised text of the Corporate Income Tax Law, with the special features established for this deduction in article 68.2 of the Income Tax Law, as amended as of December 31 2014, if they meet the conditions and requirements set forth therein.

Note: However, please note that the wording of article 68.2.b) of the Personal Income Tax Law that regulates the deduction for investment in new tangible fixed assets and real estate investments that came into force on January 1, 2015 affects the income obtained from that date that is invested between the beginning of the tax period in which the income subject to investment is obtained and the following tax period.

Incompatibility

This deduction is incompatible with the application of freedom of amortization, with the deduction for investments in the Canary Islands and with the reserve for investments in the Canary Islands.