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Practical Manual of Companies 2020.

Canary Islands tax system

  • In the first 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, temporal scope is modified ##1##contained in article 27.11 regarding advance investments and in article 29.2 that regulates the authorization of registration in the official Registry of Entities of the Special Zone Canary Islands (ZEC) of Law 19/1994, of July 6, modifying the Economic and Fiscal Regime of the Canary Islands, establishing the deadline as December 31, 2021.

  • 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, introduces a new eighth transitional provision in Law 19/1994, of 6 July, modifying the Economic and Fiscal Regime of the Canary Islands, to extend the deadlines linked to the Reserve for Investments in the Canary Islands, in the terms indicated below.

    The maximum period of three years referred to in article 27.4 of Law 19/1994, of July 6, will be four years for the amounts destined for 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.

    Furthermore, the term referred to in the first paragraph of article 27.11 of Law 19/1994, of July 6, will be four years for the anticipated investments materialized in 2017.

  • The third Final Provision of Royal Decree-Law 12/2021, of June 24, which adopts urgent measures in the field of energy taxation and in matters of energy generation, and on management of the regulation fee and the water use rate, with effects for the tax periods that begin during the year 2020, modifies the fourteenth Additional Provision of Law 19/1994, of July 6, to update the limit of the deduction for investments in film productions made in the Canary Islands, which goes from 5.4 to 12.4 million euros .

    Furthermore, said third Final Provision modifies the third paragraph of the fourteenth Additional Provision of Law 19/1994, of July 6, to adapt it to the new wording of article 36.2 of the LIS , establishing that in relation to the minimum amount of expense established in article 36.2 of the LIS, the expenses incurred in the Canary Islands for animation of a foreign production must be greater than 200,000 euros. Regarding the execution of visual effects services , the provisions of letter b) of article 36.2 of the LIS will apply.

You can consult all the particularities of the Canary Islands Tax Regime in Chapter 12 of this Practical Manual.