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Practical Manual for Companies 2020.

Deductions for investment in the Canary Islands with increased limits (page 16 bis of form 200)

Entities that are entitled to apply deductions for investments made in the Canary Islands under the terms set out in the previous sections will record their amount in box [00590] "Canary Islands Investment Deductions" on page 14 of form 200. The amount entered in this box will be the result of completing the breakdown table on page 16 bis of form 200 explained below.

This table must contain the amounts relating to the deductions on fixed assets generated in the tax periods 2010 to 2020, and to the deductions included in Chapter IV of Title VI of the LIS as long as they are equivalent to article 26 of Law 61/1978 generated in the tax periods 2001 to 2020, as detailed below:

  • Column "Joint limit" expresses the joint percentage that must operate on the total quota reduced by the deductions for double taxation and the bonuses ( box [00582] "Positive adjusted total quota" on page 14 of form 200), to determine the maximum amount applicable in the tax period subject to declaration.

    Keep in mind:

    The deductions for investments in fixed assets that come from previous tax periods that are pending application as of the tax period subject to declaration, will apply an individual limit of 50 percent , and a joint limit of 70 percent.

    With effect for tax periods beginning on or after 7 November 2018, in the islands of La Palma, La Gomera and El Hierro, the individual limit of 50 per cent is raised to 60 per cent , and the joint limit of 70 per cent to 80 per cent.

    As for the deductions included in Chapter IV of Title VI of the LIS, insofar as they are equivalent to article 26 of Law 61/1978 , they will apply the joint limit of 60 percent on the net quota of the tax period, which will be raised to 90 percent when the amount of the deduction for research and development activities, which corresponds to expenses and investments made in the tax period itself, exceeds 10 percent of said net quota.

    With effect for periods beginning on after 7 November 2018 on the islands of La Palma, La Gomera and El Hierro, the joint of percent will raised to percent .

  • The "Year limit" column indicates the last year in which the deduction may be applied, which will be the first of those indicated when the fiscal year coincides with the calendar year, provided that the fiscal year has a duration of twelve months.

  • In the column "Pending/generated deduction" the amounts of the deductions for fixed assets and investments included in Chapter IV of Title VI of the LIS will be entered in the corresponding boxes, insofar as they are equivalent to article 26 of Law 61/1978, both from previous tax periods and the current tax period, and which are pending application at the beginning of the tax period that is the subject of the declaration.

    Rows “Fixed assets (Law 20/1991) 2020(*)” , “Investments in the Canary Islands (Law 20/1991) 2020(*)” and “Investments in La Palma, La Gomera and El Hierro (Law 20/1991) 2020(*)” , must only be completed if they are deductions pending application corresponding to a previous tax period starting in 2020.

  • In the column "Applied in this settlement" the part (or the totality, if applicable) of the amounts recorded in the previous column "Deduction generated" relating to the deductions for investments made in the Canary Islands, which are applied in the settlement corresponding to the period subject to settlement, will be recorded.

    In box [00590] the total amounts entered in the column "Applied in this settlement" will be recorded, which must be transferred to box [00590] "Deductions in the Canary Islands" on page 14 of form 200 regarding the settlement of the Tax.

  • In the column "Pending application in future periods" the positive difference between the amount of deductions pending at the beginning of the tax period or generated in said period in the "Pending/generated deduction" column and the amount of deductions applied in the settlement of the tax period subject to declaration in the "Applied in this settlement" column will be recorded. This amount will remain pending application in future tax periods, unless the tax period being declared is the last one in which the corresponding deduction can be applied, in which case the outstanding deduction balance would be lost.

    Keep in mind:

    The amounts not deducted may be applied , respecting the limits that apply to them, in the liquidations of the tax periods that conclude in the immediate and successive 15 years.

    However, the amounts corresponding to the deduction for research and development activities and technological innovation provided for in article 35 of the LIS, may be applied in the liquidations of the tax periods that conclude in the immediate and successive 18 years.

  • In the box [02287] «2020: Deduction for research and development in the Canary Islands generated in the tax period», the amount of the deduction for the performance of research and development activities generated in 2020 must be recorded.

  • In the box [02288] «2020: Deduction for technological innovation in the Canary Islands generated in the tax period», the amount of the deduction for the performance of technological innovation activities generated in 2020 must be recorded.