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Practical Handbook for Companies 2021

Deductions for job creation (art. 37 LIS)


With effect for tax periods beginning on 1 January 2019, the sole repealing provision of Royal Decree-Law 28/2018, of 28 December, for the revaluation of public pensions and other urgent measures in social, labour and employment matters, repeals article 4 of Law 3/2012, of 6 July, on Urgent Measures for the Reform of the Labour Market, which established the possibility of concluding employment contracts for an indefinite period of time to support entrepreneurs.

Notwithstanding, the sixth transitory provision of the aforementioned Royal Decree-Law 28/2018 establishes that employment contracts for an indefinite period of time to support entrepreneurs entered into until 31 December 2018 are considered valid and will continue to be governed by the regulations in force at the time they were entered into, as well as the corresponding incentives, where applicable.

Therefore, the contracts signed during 2018 will generate the right to apply the deduction for job creation of article 37 of the LIS.This deduction, as provided for in Article 37 of the LIS, will be taken from the full tax liability for the tax period corresponding to the end of the one-year trial period required for the corresponding type of contract.

Consequently, if the contract was validly entered into in 2018 and the trial period ends in a year , this deduction can be applied to the full tax liability for 2019, in the event that the tax period coincides with the calendar year.

With regard to year 2020, the right to apply this deduction cannot be generated as from 1 January 2019 this type of contract cannot be entered into.