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Practical Manual of Companies 2020.

Requirements

Regulation: Article 27.3 and 4 Law 19/1994.

  1. The reserve for investments must appear in the balance sheets with absolute separation and appropriate title and will be unavailable as long as that the assets in which it materialized must remain in the company.

  2. The amounts allocated to the RIC must be materialized within a maximum period of three years, counted from the date of accrual of the tax corresponding to the year in which it is has provided the same, in the realization of some of the following investments which, as a summary, are detailed below:

    New:

    With effect from December 30, 2020, the second Final Provision of Royal Decree-Law 39/2020, of December 29, on financial measures for social and economic support and compliance with the execution of sentences, modifies Law 19/1994, of July 6, modifying the Economic and Fiscal Regime of the Canary Islands, introducing a new eighth transitional provision in said Law, which establishes that the maximum term of three years referred to in article 27.4 of Law 19/1994 and mentioned in point 2 above, will be four years for amounts allocated to the reserve for investments in the Canary Islands endowed , in the terms indicated in its regulatory regulations, with benefits obtained in tax periods beginning in 2016.

    1. Article 27.4 A)

      Initial investments that consist of the acquisition of new assets of tangible or intangible assets as a consequence of:

      • The creation of an establishment.
      • The expansion of an establishment.
      • The diversification of the activity of an establishment for the production of new products.
      • The substantial transformation in the production process of an establishment.

      Likewise, the investments in land, built or not, will be considered initial 1##, provided that they have not previously benefited from the reserve regime and are affected:

      • To the promotion of protected housing, when this classification is applicable in accordance with the provisions of Decree 27/2006, of March 7, which regulates the actions of the Canary Islands Housing Plan, and is intended for rental by the company. promotion girl.

      • To the development of industrial activities included in divisions 1 to 4 of the first section of the rates of the Tax on Economic Activities, approved by Royal Legislative Decree 1175/1990, of September 28, which approves the rates and instructions of the Tax on Economic Activities.

      • To socio-health activities, residential centers for the elderly, geriatric homes and neurological and physical rehabilitation centers.

      • To commercial areas that are the subject of a rehabilitation process.

      • To tourist activities regulated in Law 7/1995, of April 6, on the Regulation of Tourism in the Canary Islands, whose acquisition aims to rehabilitate a tourist establishment.

      For the sole purpose of understanding that the value corresponding to the land is included in the amount of the materialization of the Reserve, rehabilitation works will be considered actions aimed at the renovation, expansion or improvement of tourist establishments , provided that they meet the necessary conditions to be incorporated into the property, plant and equipment as the greatest value of the property.

      With effect for the tax periods that begin on or after November 7, 2018, the reserve for investments in the Canary Islands will not be materialized acquisition of properties intended for housing for tourist purposes.

    2. Article 27.4 B)

      The creation of jobs directly related to the investments provided for in letter A , which occurs within a period of six months from the date of entry into operation of said investment, with the requirements developed in this precept.

    3. Article 27.4 B) bis

      The creation of jobs carried out in the tax period that cannot be considered an initial investment because it does not meet any of the requirements established in letter B above, with a limit of 50 percent of the contributions to the Reserve made by the taxpayer in the tax period.

    4. Article 27.4 C)

      The acquisition of assets of tangible or intangible assets that cannot be considered an initial investment because they do not meet any of the conditions established in letter A above, the investment in assets that contribute to the improvement and protection of the environment in the Canary Islands, as well as those research and development expenses that are determined by regulation.

      In the case of land , built or not, this must be affected by the conditions referred to above in article 27.4 A) of Law 19/1994.

      For the sole purpose of understanding that the value corresponding to the land is included in the amount of the materialization of the Reserve, rehabilitation works will be considered actions aimed at the renovation, expansion or improvement of tourist establishments , provided that they meet the necessary conditions to be incorporated into the property, plant and equipment as the greatest value of the property.

      With effect for the tax periods that begin on or after November 7, 2018, the reserve for investments in the Canary Islands in the rehabilitation or reform of properties intended for residential purposes cannot be materialized. tourist.

    5. Article 27.4 D)

      The subscription of:

      • Shares or participations in the capital issued by companies as a consequence of their constitution or capital increase that they develop its activity in the archipelago, provided that the requirements developed in this legal precept are met.

      • Shares or participations in the capital issued by entities of the Canary Islands Special Zone as a consequence of their constitution or capital increase, provided that the requirements and conditions established in the previous indent of this letter D and those provided for in Chapter I of Title V of Law 19/1994, provided that they meet the conditions developed in this legal precept.

      • Any financial instrument issued by financial entities provided that the funds raised for the purpose of materializing the reserve are intended for financing private projects in the Canary Islands, whose investments are suitable in accordance with the provisions of this article, provided that the emissions are supervised by the Government of the Canary Islands, and have a binding report from the State Tax Administration Agency, in the terms established by regulation.

      • Public debt securities of the Autonomous Community of the Canary Islands , of the Canary Islands Local Corporations or of their public companies or autonomous bodies, provided that it is intended to finance investments in infrastructure and equipment or of improvement and protection of the environment in the Canary Islands, with a limit of 50 percent of the allocations made in each year.

      • Securities issued by public bodies that proceed with the construction or exploitation of infrastructure or equipment of public interest for public administrations in the Canary Islands, when the financing obtained with said issue is used exclusively for such construction or exploitation, with the limit of 50 percent of the allocations made in each year.

      • Securities issued by entities that proceed with the construction or exploitation of infrastructure or equipment of public interest for public administrations in the Canary Islands, once the corresponding administrative concession or enabling administrative title has been obtained, when the financing obtained with said issue is exclusively allocated to such construction or exploitation, with the limit of 50 percent of the allocations made in each year and in the terms provided by regulation. The issuance of the corresponding securities will be subject to prior administrative authorization by the competent Administration for the granting of the corresponding authorizing administrative title.

  3. The assets in which the investment is materialized must be located or received in the Canary Islands, used therein, affected and necessary for the development of the taxpayer's economic activities, except in the case of those that contribute to the improvement and protection of the environment in the Canary Islands.

  4. Materialization will be deemed to have occurred, even in cases of acquisition through financial leasing, at the time the assets come into operation.

  5. The assets in which the investment reserve referred to in letters A and C of article 27.4 of Law 19/1994 has materialized, as well as those acquired by virtue of the provisions of letter D of that same section, must remain in operation in the acquirer's company for at least five years, without being transferred, leased or assigned to third parties for their use. When its permanence is less than said period, this requirement will not be considered non-compliance when another asset element is acquired that replaces it at its net book value, before or within the period 6 months from its removal from the balance sheet, which meets the requirements for the application of the reduction provided for in this article and which remains in operation for the time necessary to complete said period. In the case of the acquisition of land , the term will be ten years.

    In cases of loss of the asset it must be replaced under the terms provided in the previous paragraph.

    Taxpayers who engage in the economic activity of leasing or transferring to third parties for their use of assets of fixed assets may enjoy the investment reserve regime, provided that there is no direct link or indirectly, with the lessees or assignees of said assets, in the terms defined in article 18.2 of the LIS , nor are they financial leasing operations. For these purposes, it will be understood that the leasing of real estate is carried out as an economic activity only when the circumstances provided for in article 27.2 of the Personal Income Tax Law occur.

    In the cases of leasing of real estate, in addition to the conditions provided for in the previous paragraph, the taxpayer must be considered a tourism company in accordance with the provisions of Law 7/1995, of April 6, of the Canary Islands Tourism Regulation, concerns the leasing of housing protected by the promoter company, of real estate used for the development of industrial activities included in divisions 1 to 4 of the first section of the Activities Tax rates. Economic, approved by Royal Legislative Decree 1175/1990, of September 28, which approves the rates and instructions of the Tax on Economic Activities, or of commercial areas located in areas whose tourist offer is in decline, to be specified. of integrated interventions for the rehabilitation of urban areas, according to the terms defined in the general planning guidelines of the Canary Islands, approved by Law 19/2003, of April 14.

  6. The investments in which the reserve is materialized may be financed through financial leasing contracts , in which case the reduction in the tax base will be conditional on the effective exercise of the purchase option.