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Practical Handbook for Companies 2021

Deductions to be applied

According to the provisions of paragraph 3 of the twenty-fourth transitory provision of the LIS, the deductions provided for in Chapter IV of Title VI of Law 43/1995, of 27 December, on Corporate Income Tax and in Chapter IV of Title VI of the RDLeg. 4/2004, which were pending application at the beginning of the first tax period starting on or after 1 January 2015, may be deducted as from that tax period, subject to the requirements laid down in their respective applicable legislation prior to that date, within the period and under the conditions established in Article 39 of the LIS.

In application of the above, it must take into account the following:

  • For each year between 2003 and 2020, lists the deductions generated in those years which, due to insufficient tax liability, may be applied in future tax periods, within the corresponding period established in the applicable regulations, as well as, where applicable, in cases where the start of the calculation of this period has been deferred in accordance with the provisions of article 37 of Law 43/1995, of 27 December, on Corporate Income Tax, in article 44 of RDLeg.4/2004 or Article 39 of the LIS.

    For the year 2021, only deductions pending application in respect of a previous tax period starting in 2021 will be collected.

  • In the tax periods starting before 25 June 2000, the deductions of Chapter IV of Title VI of Law 43/1995 could be applied in the tax periods ending in the five years immediately following the tax period in which they were generated and not applied in full.

  • In the tax periods starting between 25 June 2000 and 31 December 2001, the deductions for research and development and technological innovation, as well as those for the promotion of information and communication technologies, could be applied in the tax periods ending in the ten years immediately and successively from the end of the tax period in which they were generated and not applied in full.For the other deductions of Chapter IV of Title VI of Law 43/1995, this period was five years.

  • In the tax periods starting on or after 1 January 2002, the deductions for research and development and technological innovation, as well as those for the promotion of information and communication technologies, can be applied in the tax periods ending in the fifteen years immediately following the end of the tax period in which they were generated and not applied in full.For other deductions under Chapter IV of Title VI of Law 43/1995 or the LIS, this period was ten years.

  • Deductions for research and development and technological innovation regulated in article 35 of RDLeg.4/2004, the amounts corresponding to the tax periods starting on or after 1 January 2012 not applied therein, may be applied in the tax periods ending in the eighteen years immediately following and thereafter.For other deductions under Chapter IV of Title VI of RDLeg.4/2004 for tax periods starting on or after 1 January 2012, that period was fifteen years, in accordance with the provisions of Article 44 of RDLeg.4/2004.

  • In the tax periods commencing on or after 1 January 2015, in accordance with the provisions of Article 39 of the LIS, the amounts corresponding to the deduction for research and development and technological innovation regulated in Article 35 of the LIS, may be applied in the settlements of the tax periods ending in the eighteen years immediately and successively.For the other deductions included in Chapter IV of Title VI of the LIS, this period is fifteen years.

  • The deductions pending application at the beginning of the first tax period starting after the respective rule modifying the time limit has come into force are applicable, provided that the requirements are met, until the end of the corresponding new time limit counted from the end of the tax period in which the deductions were generated.