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Practical manual for Income Tax 2024. Part 1

Freedom of amortization in renewable sources

Regulations: Seventeenth Additional Provision LIS

 Note: This tax incentive will only apply to those investments that came into operation in the years 2023 and 2024.

Scope

Investments in facilities intended for the following purposes may be freely amortized in the 2024 tax period:

  • Self-consumption of electrical energy using energy from renewable sources as defined in Royal Decree 244/2019, of April 5.

  • Thermal use for own consumption that uses energy from renewable sources, replacing installations that use energy from non-renewable fossil sources.

Clarifications:

  • renewable energy will be considered to be that from non-fossil renewable sources, that is, wind energy, solar energy (solar thermal and solar photovoltaic) and geothermal energy, ambient energy, tidal energy, wave energy and other types of ocean energy, hydropower and energy from biomass, landfill gases, wastewater treatment plant gases, and biogas, as defined in Directive ( EU ) 2018/ 2001 of the European Parliament and of the Council of December 11, 2018, relating to the promotion of the use of energy from renewable sources.

  • In the case of electrical energy production facilities : Only energy from facilities in category b) of article 2.1 of Royal Decree 413/2014, of June 6, regulating the activity of producing electrical energy from renewable energy sources, cogeneration and waste, will be considered renewable energy.

  • In the case of installations using electrically powered heat pumps: Only its use for heat will be considered renewable energy from a seasonal factor performance (SCOPnet) of 2.5 in accordance with Commission Decision 2013/114/ EU of 1 March 2013, establishing the guidelines for the calculation by Member States of renewable energy from heat pumps of different technologies, in accordance with the provisions of Article 5 of Directive 2009/28/ EC of the European Parliament and the Council.

  • In the case of installations that use cold pumps : They will only be considered to produce renewable energy when the cooling system operates above the minimum efficiency requirement expressed as a primary seasonal performance factor and this is at least 1.4 (SPFplow), in accordance with the provisions of the Delegated Regulation ( EU ) 2022/759 of the Commission of December 14, 2021.

  • In the case of thermal renewable energy generation systems (heat and cold) for air conditioning or domestic hot water generation, it will only be understood that non-renewable primary energy consumption has improved when the non-renewable primary energy consumption indicator is reduced by at least 30 percent, or an improvement in the energy rating of the facilities is achieved to obtain an energy class “A” or “B”, on the same rating scale.

Exceptions

The following may not benefit from this free amortization regime:

  • Buildings.

  • Those installations that are mandatory under the regulations of the Technical Building Code, approved by Royal Decree 314/2006, of March 17, unless the installation has a nominal power greater than the minimum required, in which case the part of the cost of the installation proportional to the installed power above the minimum required may be subject to free amortization.

 Requirements

To apply this incentive in the 2024 financial year, the following requirements must be met:

  • That the facilities must have been made available to the taxpayer as of October 20, 2022.

  • That the entry into operation of the new facilities must take place in the year 2023 or 2024. 

  • That during the 24 months following the date of the start of the tax period in which the acquired elements come into operation, the company's total average workforce remains the same as the average workforce of the previous 12 months.

    To calculate the total average workforce of the entity, the number of employees 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.

  • That the taxpayer is in possession of documentation proving that the investment uses energy from renewable sources, as indicated below.

Once the above requirements have been met, amount of the investment that may from the free amortization regime will be € .

Note:This tax incentive is only applicable to tax periods beginning or ending in 2023 (when the elements referred to come into operation in 2023) or beginning or ending in 2024 (when the elements come into operation in 2024). Therefore, if the amount is not fully amortized in those tax periods, the unamortized portion cannot be freely amortized in subsequent tax periods.

Supporting documentation

In order to apply the freedom of amortization regulated in this provision, taxpayers must be in possession, as appropriate, of the following documentation proving that the investment uses energy from renewable sources, distinguishing the following assumptions depending on the type of renewable energy involved:

  1. Electrical power installations:

    • In the case of generation: the Operating Authorization.

    • In facilities with self-consumption surpluses: the accreditation of registration in the Administrative Registry of Electric Power Production Facilities (RAIPREE) or,

    • In installations of less than 100 kW : the Electrical Installation Certificate (CIE) in accordance with the Low Voltage Electrotechnical Regulations, in accordance with the provisions of Royal Decree 244/2019, of April 5.

  2. Renewable gas production systems (biogas, biomethane, renewable hydrogen): accreditation of registration in the Registry of gas production facilities from renewable sources regulated in article 19 of Royal Decree 376/2022, of May 17.

  3. Industrial or process thermal (heat and cold) renewable energy generation systems: accreditation of registration or report from the competent body in the Autonomous Community.

  4. Thermal renewable energy generation systems (heat and cold) for air conditioning or domestic hot water generation: energy efficiency certificate issued by the competent technician after the investments have been made, indicating the incorporation of these systems with respect to the certificate issued before the start of the investments.

Incompatibility

The taxpayer may choose to apply this incentive or the free amortization regime provided for small companies for investments with job creation when the latter is applicable.

Consequences of failure to comply with the obligation to maintain the workforce

In the event that, after the application of the tax benefit, the obligation to maintain the workforce is not met, the full amount corresponding to the excess deducted must be paid, plus the corresponding late payment interest. The payment of the full amount and late payment interest will be made together with the self-assessment corresponding to the tax period in which the obligation was not met.