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Practical manual for Income Tax 2024. Part 1

Deductions from the full fee

Deductions for incentives and stimuli to business investment in economic activities in direct estimation

Economic and fiscal regime of the Canary Islands 

Canary Islands Investment Reserve

With effect from 1 January 2024, the Canary Islands Investment Reserve must be funded from profits obtained within the period of validity of Commission Regulation ( EU) 651/2014 of 17 June 2014 declaring certain categories of aid compatible with the internal market in application of Articles 107 and 108 of the Treaty, or any replacement regulation.

Special tax regime of the Balearic Islands

The aforementioned special tax regime for the Balearic Islands continues to apply from 2023 to 2028, inclusive.

With effect for tax periods beginning between January 1, 2023, and December 31, 2028, a special tax regime was introduced for the Balearic Islands through Law 31/2022, of December 23, on the General State Budget for the year 2023, which entitles taxpayers of the PIT who carry out economic activities in direct estimation to a deduction from the full quota for the net operating income destined to the investment reserve and a bonus corresponding to the income derived from the sale of tangible goods produced in the Balearic Islands by themselves, typical of agricultural, livestock, industrial and fishing activities.

In order to allow the full application of these tax incentives in the most effective and simple way possible, as well as to provide legal certainty to legal operators, and to specify some legal concepts, the Regulation for the development of the Special Tax Regime of the Balearic Islands is approved through Royal Decree 710/2024, of July 23 (BOE of July 24) with effect from PIT for the years 2023 to 2028.

Deductions for donations and other contributions

Donations, donations and contributions for priority patronage activities

Deductible concepts and basis of deduction

Royal Decree-Law 6/2023, of December 19 (Official State Gazette of December 20), expressly includes, among the types of donations that entitle the taxpayer to the deduction, the transfer of use of movable or immovable property made without consideration, also specifying the valuation of said transfer of use of movable or immovable property.

Deduction percentages

In order to increase tax incentives for patronage, the amount of the first section of the deduction base on which the 80% percentage is applied has been increased from 150 to 250 euros. Furthermore, the current generally applicable deduction percentage is increased from 35 percent to 40 percent.

However, the most important new feature introduced concerns the reduction from 4 to 3 years in the number of fiscal years in which donations to the same entity must be made for amounts equal to or greater than those of the previous fiscal year, in order for the 5-point increase in the deduction percentage to be applied, rising from 40 to 45 percent.

Deduction for habitual residence and effective on the island of La Palma during the 2024 financial year

Royal Decree-Law 4/2024, of June 26, which extends certain measures to address the economic and social consequences arising from the conflicts in Ukraine and the Middle East and adopts urgent measures in fiscal, energy and social matters, modifies the Additional Provision fifty-seventh in the Law of the PIT to extend to 2024 the temporal scope of application of the deduction provided for in article 68.4.1 of the Law of PIT (deduction for income earned in Ceuta and Melilla) applicable to taxpayers with habitual and effective residence on the island of La Palma.

Deduction for works to improve the energy efficiency of homes

With effect from January 1, 2024, the Fiftieth Additional Provision of the Law of the PIT to extend the temporal scope of application of the deductions in the PIT for energy efficiency improvement works for one more year (until December 31, 2024 in the case of primary residences and until December 31, 2025 in the case of residential buildings).

Deduction for the acquisition of plug-in electric vehicles and fuel cells and charging points

The two new deductions established by the Fifty-eighth Additional Provision in the Law of the PIT, which are:

  • Deduction for the purchase of new plug-in electric and fuel cell vehicles.

  • Deduction for the installation of battery charging points for said electric vehicles.