Deduction for technological innovation activities of production processes in the value chain of the automotive industry.

In article 7 of Royal Decree-Law 23/2020, of June 23, approving measures in the field of energy and in other areas for economic reactivation, in the wording given by the Eighth Final Provision of Royal Decree-Law 34/2020, of November 17, on urgent measures to support business solvency and the energy sector, and in tax matters, with effect for the tax periods that begin within the years 2020 and 2021 , the deduction percentage referred to in letter c) of article 35.2 of the LIS will be increased by 38 percentage points for the expenses incurred in projects started after June 25, 2020 consisting of the implementation of technological innovation activities the result of which is a technological advance in obtaining new production processes in the value chain of the automotive industry or substantial improvements to existing ones.

This increase may be applied by taxpayers who are considered small and medium-sized businesses in accordance with the provisions of Annex I of the Regulation ( EU ) no. Commission 651/2014 of 17 June 2021, declaring certain categories of aid compatible with the internal market in application of articles 107 and 108 of the Treaty.

In the case of taxpayers who do not have the aforementioned consideration, the expected increase will be 3 percentage points , provided that the requirements indicated in the regulation are met, in terms of collaboration and assumption of expenses by small and medium-sized companies.

Accordingly, in accordance with the above rules, and medium-sized enterprises be eligible for an increased deduction percentage of percent companies that are considered as such will be eligible for an increased deduction percentage of .

The amount of the deduction that corresponds to the increase provided for in this article may not exceed 7.5 million euros for each project developed by the taxpayer. Additionally, the amount of the aforementioned deduction, together with the rest of the aid received by the taxpayer, may not exceed 50 percent of the cost of the project that has been the subject of a subsidy, or the 15 percent in the case of taxpayers that are not considered small or medium-sized companies in accordance with the provisions of Annex I to Regulation (EU) No. 651/2014 of the Commission of 17 June 2014, declaring certain categories of aid compatible with the internal market in application of articles 107 and 108 of the Treaty.

Likewise, for the application of this deduction, in addition to the entity having obtained a reasoned report on the classification of the activity as technological innovation whose result is a technological advance in obtaining new processes of production in the value chain of the automotive industry or substantial improvements to those already existing, in the terms established in letter a) of article 35.4 of the LIS, it will be necessary to comply with the conditions provided for in the Chapter I and in article 29 , except as regards the basis of deduction, of the aforementioned Commission Regulation (EU) No. 651/2014.

You can consult all the details of this deduction in Chapter 6 of this Practical Manual.