RIC case studies
Example 1
In the tax period beginning on January 1, 2019, company "A", domiciled in the Canary Islands, makes a contribution to RIC for an amount of 1,000 euros from the profits for the 2019 financial year. During this same period, the company has profits that are not subject to distribution of 1,000,000 euros.
In 2020, it acquired a tangible fixed asset for 1,000 euros that contributes to improving the environment in the Canary Islands. During this same period, the company has profits that are not subject to distribution of 1,000,000 euros.
As in fiscal year 2019, in fiscal year 2020 company A has profits that are not subject to distribution of 1,000,000 euros.
In this case, the reduction that company "A" may apply to its tax base will be limited to 90 percent of the portion of the profit obtained that is not subject to distribution:
Limit: 90% x 1,000,000 euros = €900,000.
Exercise 2019 :
Note: This example assumes that the table relating to Advance Investments already existed in fiscal year 2019.
Company “A” makes a provision to the RIC for an amount of 1,000 euros from its 2019 profits (it can do so because it meets the limit, since 1,000 euros < 900,000 euros), so must enter an amount of 1,000 euros in the row “Amount of the RIC provision charged to 2019 profits” of the table “Special reserve regime for investments in the Canary Islands (Law 19/1994)” on page 22 of form 200.
In addition, must complete on page 13 of form 200, box [00404] "Reserve for investments in the Canary Islands (Law 19/1994)" (negative adjustment) for an amount of 1,000 euros , since it is the value of the reduction of the tax base for the year 2019 that is made due to the allocation to the RIC.
However, an amount of 1,000 euros remains pending to be materialized in subsequent periods. For this reason, company "A" must complete, in the first box on page 22 of Form 200, column "Pending materialization of RIC in future periods", in the row corresponding to the RIC 2019 for the amount of 1,000 euros .
According to the above, company "A" must complete the adjustment on page 13 and the table on page 22 of form 200 for the 2020 fiscal year, as follows:
| Detail of the corrections to the P&L account result (page 13 of form 200) | ||||
|---|---|---|---|---|
|
Canary Islands investment reserve (Law 19/1994) |
[00403] |
--- |
[00404] |
1,000 |
Special reserve regime for investments in the Canary Islands (page 22 of form 200)
| RIC | Pending materialization RIC at the beginning of period | Applied / materialized in this settlement | Pending materialization RIC at the end of the period | ||||
|---|---|---|---|---|---|---|---|
| Planned investments letters A and B, art. 27.4 Law 19/1994 | Planned investments letters B bis, C and D, art. 27.4 Law 19/1994 | Early investments considered materialization of the RIC in this liquidation | |||||
| RIC 2019 | --- | --- | --- | --- | 1,000 | ||
| Amount of the RIC allocation charged to 2019 profits | |
|---|---|
| [00927] | 1,000 |
Exercise 2020 :
Company "A" does not make any provision to the RIC in this fiscal year, so should not complete the row "Amount of the RIC provision charged to 2020 profits" of the table "Special reserve regime for investments in the Canary Islands (Law 19/1994)" on page 22 of form 200.
Furthermore, will not have to complete box [00404] "Reserve for investments in the Canary Islands (Law 19/1994)" (negative adjustment) on page 13 of form 200, since the taxable base for the 2020 financial year will not be reduced due to the allocation to the RIC.
Please note that the investment made by company B in fiscal year 2020 is not considered an early investment, since, although no RIC is provided in 2020, the investment in this fiscal year is a materialization of the provision of the reserve that was made in 2019.
At the beginning of the 2020 financial year, €1,000 remain to be materialized of the provision to the RIC against 2019 profits made in the 2019 financial year, so company "A" must record in the first box on page 22 of Form 200 relating to the Special Reserve Regime for Investments in the Canary Islands (Law 19/1994) column "RIC pending to be materialized at the beginning of the period", in the row corresponding to RIC 2019 , the amount of €1,000.
The amount invested in the period 2020 is 1,000 euros, therefore company "A" must complete the first table on page 22 of Form 200 relating to the Special Reserve Regime for Investments in the Canary Islands (Law 19/1994), entering in column "Investments planned letters B bis, C and D, art. 27.4 Law 19/1994", in the row corresponding to RIC 2019 , the amount of the materialization, that is, 1,000 euros . In the 2020 financial year, the total amount of the provision made during 2019 is materialized, so there is nothing pending to materialize for future years. For this reason, company "A" should not complete the column "Pending RIC materialization at the end of the period."
In this way, the adjustment on page 13 and the table on page 22 of model 200 corresponding to the 2020 fiscal year will be completed as follows:
| Detail of the corrections to the P&L account result (page 13 of form 200) | ||||
|---|---|---|---|---|
|
Canary Islands investment reserve (Law 19/1994) |
[00403] |
--- |
[00404] |
0 |
Special reserve regime for investments in the Canary Islands (page 22 of form 200)
| RIC | Pending materialization RIC at the beginning of period | Applied / materialized in this settlement | Pending materialization RIC at the end of the period | ||||
|---|---|---|---|---|---|---|---|
| Planned investments letters A and B, art. 27.4 Law 19/1994 | Planned investments letters B bis, C and D, art. 27.4 Law 19/1994 | Early investments considered materialization of the RIC in this liquidation | |||||
| RIC 2019 | 1,000 | --- | 1,000 | --- | 0 | ||
| Amount of the RIC allocation charged to 2020 profits | |
|---|---|
| [00927] | 0 |
Example 2
In the tax period beginning on January 1, 2019, company "B", domiciled in the Canary Islands, acquires tangible fixed assets for 1,000 euros that contribute to improving the environment in the Canary Islands.
Company "B" does not make any provision to RIC in fiscal year 2019.
In 2020, no investment is made in which the RIC can be materialized, although, against the profits of 2020, company "B" records in 2021 a provision to the RIC in the amount of 1,000 euros.
In both 2019 and 2020, company "B" has profits that are not subject to distribution of 1,000,000 euros.
In both 2019 and 2020, the reduction that company "B" may apply to its tax base will be limited to 90 percent of the portion of the profit obtained that is not subject to distribution:
Limit: 90% x 1,000,000 euros = €900,000.
Exercise 2019 :
Note: This example assumes that the table relating to Advance Investments already existed in fiscal year 2019.
Company "B" does not make any provision to the RIC in this fiscal year, so will not have to complete the row "Amount of the RIC provision charged to 2019 profits" of the table "Special reserve regime for investments in the Canary Islands (Law 19/1994)" on page 22 of form 200.
Furthermore, will not have to complete box [00404] "Reserve for investments in the Canary Islands (Law 19/1994)" (negative adjustment) on page 13 of form 200, since the taxable base for the 2019 financial year will not be reduced due to the allocation to the RIC.
The amount invested in advance in the 2019 financial year is 1,000 euros, so it remains pending to provide the RIC with a charge to profits obtained until December 31, 2021 for this amount. In this case, company «B» will have to complete the table relative to Advance investments , specifically the row Advance investments 2019 must be completed, the box corresponding to column «Investments planned letters B bis, C and D, art. 27.4 Law 19/1994» for an amount of 1,000 euros , as well as, in that same row, box «Pending provision for RIC at the end of period» for an amount of 1,000 euros . In addition, must report the materialization and its financing system in 2019, together with the Corporate Income Tax return.
In this way, the adjustment on page 13 and the table on page 22 of model 200 corresponding to the 2019 fiscal year will be completed as follows:
| Detail of the corrections to the P&L account result (page 13 of form 200) | ||||
|---|---|---|---|---|
|
Canary Islands investment reserve (Law 19/1994) |
[00403] |
--- |
[00404] |
0 |
Special reserve regime for investments in the Canary Islands (page 22 of form 200)
| Investments in advance | Pending to provide RIC at the beginning of the period | Planned investments letters A and B, art. 27.4 Law 19/1994 | Planned investments letters B bis, C and D, art. 27.4 Law 19/1994 | Pending provision RIC at end of period |
|---|---|---|---|---|
| Early Investments 2019 | --- | --- | 1,000 | 1,000 |
| Amount of the RIC allocation charged to 2019 profits | |
|---|---|
| [00927] | 0 |
Exercise 2020 :
Company "B" makes a provision to the RIC for an amount of 1,000 euros from the profits of this year (it can do so because it meets the limit, since 1,000 euros < 900,000 euros), so must enter an amount of 1,000 euros in the row "RIC provision amount RIC provision amount charged to 2020 profits" of the table "Special reserve regime for investments in the Canary Islands (Law 19/1994)" on page 22 of form 200.
In addition, must complete on page 13 of form 200, box [00404] "Reserve for investments in the Canary Islands (Law 19/1994)" (negative adjustment) for an amount of 1,000 euros , since it is the value of the reduction of the tax base for the year 2020 that is made due to the allocation to the RIC.
In the 2020 financial year, company "B" does not make any investment , but the investment made in 2019 will be considered materialized in this 2020 financial year . Therefore, said company must complete in the first box on page 22 of Form 200 relating to the Special Reserve Regime for Investments in the Canary Islands (Law 19/1994) column "Advanced investments considered materialization of the RIC in this liquidation", in the row corresponding to RIC 2020 , for the amount that is considered to have materialized in 2020 due to the provision of the RIC, that is, 1,000 euros.
Company "B" must also complete the table relating to Advance Investments. At the beginning of the 2020 financial year, the RIC is pending provision for an amount of 1,000 euros, due to the advance investment made in the 2019 financial year. For this reason, company "B" must complete column "Pending provision for RIC at the beginning of the period", in the row corresponding to RIC 2019 for an amount of 1,000 euros . The amount invested in 2019 was 1,000 euros and the allocation to the RIC in 2020 was 1,000 euros, so at the end of the 2020 financial year there is no pending allocation to RIC for any amount. For this reason, company "B" should not complete the column "Pending provision of RIC at the end of the period", in the row corresponding to RIC 2019 .
In this way, the adjustment on page 13 and the table on page 22 of model 200 corresponding to the 2020 fiscal year will be completed as follows:
| Detail of the corrections to the P&L account result (page 13 of form 200) | ||||
|---|---|---|---|---|
| Canary Islands investment reserve (Law 19/1994) | [00403] | --- | [00404] | 1,000 |
Special reserve regime for investments in the Canary Islands (page 22 of form 200)
| RIC | Pending materialization RIC at the beginning of period | Applied / materialized in this settlement | Pending materialization RIC at the end of the period | ||||
|---|---|---|---|---|---|---|---|
| Planned investments letters A and B, art. 27.4 Law 19/1994 | Planned investments letters B bis, C and D, art. 27.4 Law 19/1994 | Early investments considered materialization of the RIC in this liquidation | |||||
| RIC 2019 | --- | --- | --- | --- | --- | ||
| RIC 2020 | --- | --- | --- | 1,000 | --- | ||
| Amount of the RIC allocation charged to 2020 profits | |
|---|---|
| [00927] | 1,000 |
| Investments in advance | Pending to provide RIC at the beginning of the period | Planned investments letters A and B, art. 27.4 Law 19/1994 | Planned investments letters B bis, C and D, art. 27.4 Law 19/1994 | Pending provision RIC at end of period |
|---|---|---|---|---|
| Early Investments 2019 | 1,000 | --- | --- | 0 |
| Early Investments 2020 | --- | --- | --- | --- |
Example 3
In the tax period beginning on January 1, 2018, company "C", domiciled in the Canary Islands, acquires tangible fixed assets for 1,000 euros that contribute to improving the environment in the Canary Islands.
Company "C" makes a contribution to the RIC of 200 euros from its 2018 financial year profits.
In the 2019 financial year, company "C" does not make any investment in which the RIC can be materialized, although, from the profits of this financial year, said company makes a provision to the RIC in the amount of 600 euros.
In the 2020 financial year, company "C" does not make any investment in which the RIC can be materialized, although, from the profits of this financial year, said company makes a provision to the RIC in the amount of 800 euros.
In both fiscal year 2018 and fiscal years 2019 and 2020, company "C" has profits that are not subject to distribution of 1,000,000 euros.
In both fiscal year 2018 and fiscal years 2019 and 2020, the reduction that company "C" may apply to its tax base will be limited to 90 percent of the portion of the profit obtained that is not subject to distribution:
Limit: 90% x 1,000,000 euros = €900,000.
Exercise 2018 :
Note: This example assumes that the table relating to Advance Investments already existed in fiscal year 2018.
Company "C" made a provision to the RIC for an amount of 200 euros from the profits of this year (it can do so because it meets the limit, since 200 euros < 900,000 euros), so must enter an amount of 200 euros in the row "RIC provision amount 2018" of the table "Special reserve regime for investments in the Canary Islands (Law 19/1994)" on page 22 of form 200.
In addition, must complete on page 13 of form 200, box [00404] "Reserve for investments in the Canary Islands (Law 19/1994)" (negative adjustment) for an amount 200 euros , since it is the value of the reduction of the tax base for the year 2018 that was made due to the allocation to the RIC.
In 2018, company "C" must complete the column "Early investments considered materialization of the RIC in this liquidation" in the first box on page 22 of Form 200 relating to the Special Reserve Regime for Investments in the Canary Islands (Law 19/1994), in the row corresponding to RIC 2018 , the period in which the investment was made, for the amount that is considered to have been materialized in 2018 due to the provision of the RIC, that is, 200 euros .
The amount invested in advance in the 2018 financial year is 1,000 euros , as RIC has been provided in 2018 for an amount of 200 euros, the RIC remains to be provided from the profits obtained until December 31, 2020 for an amount of 800 euros. In this case, company "C" must complete the table relating to Early investments on page 22 of Form 200, specifically, it will have to complete box "Early investments 2018" in column "Planned investments letters B bis, C and D, art. 27.4 Law 19/1994", for an amount of 1,000 euros , as well as column "Pending provision for RIC at the end of the period" in the row relating to "Early investments 2018"” for an amount of 800 euros . In addition, in the 2018 financial year, must report the materialization and its financing system together with the corporate tax return.
In this way, the adjustment on page 13 and the table on page 22 of model 200 corresponding to the 2018 fiscal year will be completed as follows:
| Detail of the corrections to the P&L account result (page 13 of form 200) | ||||
|---|---|---|---|---|
|
Canary Islands investment reserve (Law 19/1994) |
[00403] |
--- |
[00404] |
200 |
| RIC | Pending materialization RIC at the beginning of period | Applied / materialized in this settlement | Pending materialization RIC at the end of the period | ||||
|---|---|---|---|---|---|---|---|
| Planned investments letters A and B, art. 27.4 Law 19/1994 | Planned investments letters B bis, C and D, art. 27.4 Law 19/1994 | Early investments considered materialization of the RIC in this liquidation | |||||
| RIC 2018 | --- | --- | --- | 200 | --- | ||
| Amount of the RIC allocation charged to 2018 profits | |
|---|---|
| [00927] | 200 |
| Investments in advance | Pending to provide RIC at the beginning of the period | Planned investments letters A and B, art. 27.4 Law 19/1994 | Planned investments letters B bis, C and D, art. 27.4 Law 19/1994 | Pending provision RIC at end of period |
|---|---|---|---|---|
| Early Investments 2018 | --- | --- | 1,000 | 800 |
Exercise 2019 :
Note: This example assumes that the table relating to Advance Investments already existed in fiscal year 2019.
Company “C” makes a provision to the RIC for an amount of 600 euros from the profits of this year (it can do so because it meets the limit, since 600 euros < 900,000 euros), so must enter an amount of 600 euros in the row “Amount of the RIC provision charged to 2019 profits” of the table “Special reserve regime for investments in the Canary Islands (Law 19/1994)” on page 22 of form 200.
In addition, must complete on page 13 of form 200, box [00404] "Reserve for investments in the Canary Islands (Law 19/1994)" (negative adjustment) for the amount of 600 euros , since it is the value of the reduction of the tax base for the year 2019 that was made due to the allocation to the RIC.
In the 2019 financial year, company "C" does not make any investment , but part of the investment made in 2018 will be considered to have materialized in this 2019 financial year. Therefore, said company must complete in the first box on page 22 of Form 200 relating to the Special Reserve Regime for Investments in the Canary Islands (Law 19/1994) column "Advanced investments considered materialization of the RIC in this liquidation", in the row corresponding to RIC 2019 , for the amount that is considered to have materialized in 2019 due to the provision of the RIC, that is, 600 euros.
At the beginning of the 2019 financial year, the RIC is pending provision for an amount of 800 euros, due to the advance investment made in the 2018 financial year . For this reason, company "C" must complete the column "Pending provision for RIC at the beginning of the period" in the table relating to Advance Investments, in the row corresponding to RIC 2018 for the amount of 800 euros . The amount invested in advance in the 2018 financial year was 1,000 euros and the provision to the RIC in the 2018 financial year was 200 euros, in 2019 it is 600 euros, so at the end of the 2019 financial year, RIC remains to be provided for an amount of 200 euros .
In this way, the adjustment on page 13 and the table on page 22 of model 200 corresponding to the 2019 fiscal year will be completed as follows:
| Detail of the corrections to the P&L account result (page 13 of form 200) | ||||
|---|---|---|---|---|
|
Canary Islands investment reserve (Law 19/1994) |
[00403] |
--- |
[00404] |
600 |
| RIC | Pending materialization RIC at the beginning of period | Applied / materialized in this settlement | Pending materialization RIC at the end of the period | ||||
|---|---|---|---|---|---|---|---|
| Planned investments letters A and B, art. 27.4 Law 19/1994 | Planned investments letters B bis, C and D, art. 27.4 Law 19/1994 | Early investments considered materialization of the RIC in this liquidation | |||||
| RIC 2018 | --- | --- | --- | --- | --- | ||
| RIC 2019 | --- | --- | --- | 600 | --- | ||
| Amount of the RIC allocation charged to 2019 profits | |
|---|---|
| [00927] | 600 |
| Investments in advance | Pending to provide RIC at the beginning of the period | Planned investments letters A and B, art. 27.4 Law 19/1994 | Planned investments letters B bis, C and D, art. 27.4 Law 19/1994 | Pending provision RIC at end of period |
|---|---|---|---|---|
| Early Investments 2018 | 800 | --- | --- | 200 |
| Early Investments 2019 | --- | --- | --- | --- |
Exercise 2020 :
Company "C" will make a provision to the RIC for an amount of 800 euros from the profits of this year (it can do so because it meets the limit, since 800 euros < 900,000 euros), so must enter an amount of 800 euros in the row "RIC provision amount 2020" of the table "Special reserve regime for investments in the Canary Islands (Law 19/1994)" on page 22 of form 200.
In addition, must complete on page 13 of form 200, box [00404] "Reserve for investments in the Canary Islands (Law 19/1994)" (negative adjustment) for an amount 800 euros , since it is the value of the reduction of the tax base for the year 2020 that was made due to the allocation to the RIC.
In the 2020 financial year, company "C" does not make any investment , but part of the investment made in 2018 will be considered materialized in this 2020 financial year. Therefore, said company must complete in the first box on page 22 of Form 200 relating to the Special Reserve Regime for Investments in the Canary Islands (Law 19/1994) column "Advanced investments considered materialization of the RIC in this liquidation", in the row corresponding to RIC 2020 , for the amount that is considered to have materialized in 2020 due to the provision of the RIC, that is, 200 euros.
Regarding the table relating to Advance Investments , at the beginning of the 2020 financial year is pending to provide the RIC for an amount of 200 euros, due to the advance investment that was made in the 2018 financial year . For this reason, company "C" must complete column "Pending provision for RIC at the beginning of the period" , in the row corresponding to RIC 2018 for an amount of 200 euros .
The amount invested in 2018 was 1,000 euros and the allocation to the RIC in 2018 was 200 euros, in 2019 600 euros and in 2020 800 euros, therefore, in the table relating to Early Investments there is no pending allocation to RIC for any amount, at the end of the 2020 financial year. For this reason, company "C" should not complete the box "Pending provision of RIC at the end of the period", in the row corresponding to the 2018 RIC.
Although in the 2020 financial year, a total reserve of 800 euros will be provided , of which 200 euros correspond to the materialization of advance investments made in the 2018 financial year , therefore would remain pending to be materialized in subsequent periods an amount of 600 euros . For this reason, company "C" must complete, in the first box on page 22 of Form 200, column "Pending RIC materialization at the end of the period", in the row corresponding to the RIC 2020 for the amount of 600 euros .
| Detail of the corrections to the P&L account result (page 13 of form 200) | ||||
|---|---|---|---|---|
|
Canary Islands investment reserve (Law 19/1994) |
[00403] |
--- |
[00404] |
800 |
| RIC | Pending materialization RIC at the beginning of period | Applied / materialized in this settlement | Pending materialization RIC at the end of the period | ||||
|---|---|---|---|---|---|---|---|
| Planned investments letters A and B, art. 27.4 Law 19/1994 | Planned investments letters B bis, C and D, art. 27.4 Law 19/1994 | Early investments considered materialization of the RIC in this liquidation | |||||
| RIC 2018 | --- | --- | --- | --- | --- | ||
| RIC 2019 | --- | --- | --- | --- | --- | ||
| RIC 2020 | --- | --- | --- | 200 | 600 | ||
| Amount of the RIC allocation charged to 2020 profits | |
|---|---|
| [00927] | 800 |
| Investments in advance | Pending to provide RIC at the beginning of the period | Planned investments letters A and B, art. 27.4 Law 19/1994 | Planned investments letters B bis, C and D, art. 27.4 Law 19/1994 | Pending provision RIC at end of period |
|---|---|---|---|---|
| Early Investments 2018 | 200 | --- | --- | 0 |
| Early Investments 2019 | --- | --- | --- | --- |
| Early Investments 2020 | --- | --- | --- | --- |