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Practical manual for Income Tax 2023.

For investment in the acquisition of shares or equity interests in new or recently created entities

Regulations: Art. 5.Nine Text Consolidated version of the legal provisions of the Autonomous Community of Galicia on taxes transferred by the State, approved by Legislative Decree 1/2011, of July 28

1. In general

Amount and maximum limit of the deduction

  • 30 percent of the amounts invested during the financial year in the acquisition of shares or corporate interests as a result of agreements to establish companies or increase capital in Public Limited Companies, Limited Companies, Labor Societies and Cooperatives.

  • The maximum limit of the deduction is 6,000 euros.

Requirements and other conditions for the application of the deduction

  • The taxpayer's participation, computed together with those of the spouse or persons related by reason of kinship, in a direct or collateral line, by consanguinity or affinity up to the third degree included, may not exceed 40% or less than 1% of the share capital of the company that is the object of the investment or of its voting rights at any time and during the three years following its incorporation or expansion.

    The maximum limit on participation in the share capital shall not apply in the case of worker-owned companies or cooperatives composed of only two partners, as long as this circumstance is maintained.

  • The entity in which the investment is to be made must meet the following requirements:

    1. It must have its registered office and tax domicile in Galicia and maintain it for three years following incorporation or expansion.

    2. Must carry out an economic activity during the three years following the constitution or expansion. For this purpose, its main activity must not be the management of movable or immovable assets, in accordance with the provisions of article 4.8. Two. a) of Law 19/1991, of June 6, on Wealth Tax.

    3. It must have, at least, one employed person with a full-time employment contract , registered in the general Social Security regime and with habitual residence in Galicia, for the three years following the constitution or expansion.

    4. In the event that the investment had been made by means of a capital increase, the commercial company must have been incorporated in the three years prior to the date of this increase , provided that, in addition, during the twenty-four months following the date of the start of the corporate tax period in which the increase was carried out, its average workforce with habitual residence in Galicia had increased, at least, by one person with respect to the average workforce with habitual residence in Galicia in the previous twelve months , and that said increase is maintained for an additional period of another twenty-four months .

      To calculate the company's total average workforce and its increase, the number of people employed will be taken into account, in accordance with the terms established by labour legislation, taking into account the contracted working hours in relation to the full working day.

  • The operations in which the deduction is applicable must be formalized in public deed , in which the identity of the investors and the amount of the respective investment must be specified.

  • The acquired shares must remain in the taxpayer's assets for a minimum period of three years, following the incorporation or expansion.

2. Additional increase in the deduction for certain circumstances

  • The deduction may be increased by an additional 15% when, in addition to meeting the requirements established for the deduction in general, one of the following circumstances occurs :

    1. These are public limited companies, limited companies, labour companies and cooperatives that prove to be innovative small and medium-sized companies, in accordance with the provisions of Order ECC /1087/2015, of June 5, which regulates the obtaining of the seal of innovative small and medium-sized company and creates and regulates the operation of the Registry of Innovative Small and Medium-sized Companies.

    2. These are public limited companies, limited companies, labour companies and cooperatives that prove to be companies promoting a business project that has obtained qualification as a technology-based employment initiative , in accordance with the provisions of Decree 56/2007, of March 15, which establishes a support program for technology-based employment initiatives ( IEBT ), by registering the initiative in the administrative Registry of Technology-Based Business Initiatives.

    3. Whether it is a public limited company, a limited company, a labour company or a cooperative with participation from universities or research organisations.

  • The maximum limit of the deduction in these cases is 9,000 euros.

Attention: The deduction percentage applicable to investments in which these circumstances apply will be 45% (30% + 15%) and the limit of 9,000 euros applicable to the calculation of the deduction, in these cases, is independent of the general limit of 6,000 euros.

Incompatibility

The deduction contained in this section will be incompatible, for the same investments, with the deductions "For investment in the acquisition of shares or corporate interests in new or recently created entities and their financing" provided for in article 5. Ten of Legislative Decree 1/2011, "For investment in shares of entities listed in the expansion segment of the alternative stock market" provided for in article 5.Eleven of Legislative Decree 1/2011 and "For investment in companies that carry out agricultural activities" provided for in article 5.Fifteen of Legislative Decree 1/2011.

Note: Taxpayers entitled to the deduction must complete the section "Additional information on the regional deduction for investment in the acquisition of shares and equity interests in new or recently created entities" in Annex B.8 of the declaration in which, in addition to the amount of the investment entitled to deduction, the NIF of the newly or recently created entity must be stated and, if applicable, that of the second entity, indicating the total amount of the deduction for investments in newly or recently created companies in the corresponding box.