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Practical Manual of Companies 2020.

Deduction for investments in foreign cinematographic production

Regulation: Article 36.2 LIS

  • To apply the deduction for investments in foreign productions of feature films or audiovisual works that allow the preparation of a physical medium prior to serial industrial production carried out in the Canary Islands, entities must meet the general requirements established for these deductions in article 36.2 of the LIS (see Chapter 6 of this Manual).

  • The deduction percentages established in article 36.2 of the LIS will be increased according to the provisions of article 94.1 a) of the Law 20/1991 , so for the tax periods that begin on or after January 1, 2020 , the following percentages will apply:

    • The 54 percent with respect to the first million base of the deduction (the greater of: 30% x 1.8 = 54% or 30% + 20% = 50%). This percentage may be applied provided that the aid intensity does not exceed 50 percent of the eligible costs , in the terms established by article 54 of Commission Regulation (EU) No. 651/2014, of June 17, 2014, declaring certain categories of aid compatible with the internal market in application of articles 107 and 108 of the Treaty.

      45 percent on the excess of said amount (the greater of 25% x 1.8 = 45% or 25% + 20% = 45%).

    • As a novelty , a new deduction percentage of 50 percent of the deduction base is introduced, when the producer in charge of the execution of visual effects services and the expenses carried out in Spanish territory are less than 1 million euros .

      The amount of this deduction may not exceed the amount established by Commission Regulation ( EU ) 1407/2013, of December 18, 2013, relating to the application of articles 107 and 108 of the Treaty on the Functioning of the European Union to minimis aid.

  • In accordance with the provisions of article 36.2 of the LIS, which establishes that the deduction for investments in foreign film productions is excluded from the limit referred to in the last paragraph of article 39.1 of the LIS, the limits applicable to this deduction will not be increased in accordance with the provisions of article 94.1.b) of Law 20/1991 , so this deduction will not be subject to the joint limit of 60/90 or 70/100 (La Palma, La Gomera and El Hierro) percent.

  • The Fourteenth Additional Provision of Law 19/1994 establishes, with effects for the tax periods that begin during the year 2020 , a specific limit for this deduction, indicating that its amount may not exceed 12.4 million euros in the case of expenses incurred in Canary Islands.

    Likewise, this provision establishes, with regard to the minimum amount of expenses established by letter a) of article 36.2 of the LIS , that the expenses incurred in the Canary Islands for animation of a foreign production must be greater than 200,000 euros . In relation to the execution of visual effects services , as provided in letter b) of article 36.2 of the LIS , when the producer responsible for the execution of visual effects services, the expenses incurred in the Canary Islands must be less than 1 million euros .