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Practical Guide to Income Tax 2025. Part 1.

Deductions from the full fee

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

General regime and special regimes of deductions for incentives and stimuli to business investment of the Corporate Income Tax Law

  • Special deduction regimes 

Support programs for events of exceptional public interest.

New deductions in the business field are included, linked to events of exceptional public interest approved in Royal Decree-Law 8/2025, of July 8, which declares various initiatives and programs as events of exceptional public interest (BOE July 9).

Economic and fiscal regime of the Canary Islands 

Deduction for Investments in the acquisition of fixed assets

Regarding thelimits applicable to the deduction for investments in fixed assets made in the Canary Islands, The Supreme Court has established as an interpretative criterion in its Judgments No. 3486/2005, 744/2009 and 745/2009, of May 31, January 29 and 15, respectively, that thejoint limitThe 70 percent (80 percent for the islands of La Palma, La Gomera and El Hierro) only applies if there are deductions for investments in fixed assets in the Canary Islands from previous tax periods together with the deductions of the tax period itself.

Canary Islands Investment Reserve

Laws 6/2025, of July 28, and 7/2024, of December 20, incorporate various modifications to Article 27 of Law 19/1994, modifying the Economic and Fiscal Regime of the Canary Islands, with effects for tax periods beginning on or after January 1, 2025. The main new features relate to:

  • A new paragraph is added to Article 27.1 to clarify that financial institutions may only use their provisions from the RIC in the financial instruments provided for in point 3 of letter D of article 27.4 when the project to be financed can be classified in the investments provided for in letters A (initial investments) or B (job creation).

  • The concept of “housing for tourist purposes” is replaced by the expression “holiday accommodation” in its non-hotel form, subject to specific regulation in the Canary Islands by Decree 142/2010, of October 4.

  • Initial investments are also considered to be those made in land, whether built upon or not, provided that they have not previously benefited from the regime of the RIC and are intended for the promotion of protected housing, and are intended for rental even when a public body, entity or organization intervenes as an intermediary in the effective formalization of the rental.

  • From 2025 onwards, in relation to the subscription of financial instruments, it is permitted that these instruments issued by financial entities may finance not only private projects in the Canary Islands but also public-private partnership projects.

Finally, the materialization of the RIC in the acquisition and, where applicable, construction of real estate located in the Canary Islands intended in a novel way for the rental of habitual housing (provided that the property has not been rented within the previous year), with or without option to purchase, and there is no direct or indirect link with the tenant. The materialization of the reserve is also permitted through investments in job creation directly related to the planned investments, and through the subscription of shares or stakes in the capital of companies that carry out their activity in the archipelago, as a result of their constitution or capital increase, when such entities make investments related to the rental of habitual housing.

Special tax regime of the Balearic Islands

The aforementioned special tax regime for the Balearic Islands continues to be applicable in the fiscal years 2023 to 2028, both inclusive, which was subject to regulatory development through Royal Decree 710/2024, of July 23 (BOE July 24).

Deduction for habitual and effective residence on the island of La Palma during the year 2025

Royal Decree-Law 13/2025, of November 25, adopting urgent complementary measures for the economic and social recovery of the island of La Palma after the damage caused by volcanic eruptions, validated by the Congress of Deputies by Resolution of December 11, 2025, modifies the fifty-seventh Additional Provision in the Law of IRPFABBRto extend to 2025 the temporal scope of application of the deduction provided for in article 68.4.1 of the Law of IRPFABBR(deduction for obtaining income 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 1 January 2025, the fiftieth Additional Provision of the Personal Income Tax Law is amended to extend the temporary scope of application of the deductions in the Personal Income Tax for energy efficiency improvement works for one more year (for the amounts paid for works carried out until 31 December 2026 in the case of main residences, and until 31 December 2027 in the case of residential buildings).

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

As a consequence of the approval of Royal Decree-Law 3/2025, of April 1, which establishes the incentive program linked to electric mobility (MOVES III) for the year 2025, the two new deductions established in the fifty-eighth Additional Provision of the Law on the IRPFABBRwhich 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.