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Practical Handbook for Companies 2021

Deduction for investments in the Canary Islands

Entities with tax domicile in the Canary Islands are entitled to apply a series of deductions for investments made and remaining in the Canary Islands, for which Article 94 of Law 20/1991, of 7 June 1991, amending the tax aspects of the Canary Islands Economic and Fiscal Regime establishes a special feature for Corporation Tax, consisting of the application of percentages and deduction limits higher than those established in the general deduction system:

  • The rates applicable on the investments made will be 80 per cent higher than those of the general scheme, with a minimum differential of 20 percentage points.

  • The deduction for investment in the Canary Islands will have as maximum limit the percentage indicated below of the net tax liability resulting from reducing the gross tax liability by the amount of the deductions for double taxation and, where applicable, the allowances provided for in Article 25 of Law 61/1978, of 27 December, on Corporate Income Tax (currently, Articles 33 and 34 of the LIS).This percentage shall always be 80 per cent higher than that fixed for each modification of the investment deduction in the general scheme with a minimum differential of 35 percentage points.Therefore, the deduction limit is set at 60 per cent of the net tax liability for the tax period, which rises to 90 per cent when the amount of the deductions for research and development and technological innovation activities and for investments in film productions, audiovisual series and live performances of performing arts and music, corresponding to expenses and investments made in the tax period itself, exceeds 10 per cent of the said net tax liability.


With effect for tax periods beginning on or after 7 November 2018, for the islands of La Palma, La Gomera and El Hierro the joint limits of 60 per cent and 90 per cent are raised, respectively, to 70 per cent and 100 per cent, provided that the Community rules on state aid so permit and that the investments are covered by Law 2/2016 of 27 September and other laws on measures for the organisation of the economic activity of these islands.

Entities that are entitled to apply deductions for investments made in the Canary Islands shall enter the amount in box [00590] "Deductions Canary Islands Investment" on page 14 of form 200.The amount entered in this box will be the amount resulting from filling in the breakdown table "Deductions for investment in the Canary Islands with increased limits" on pages 16 bis and 17 of form 200.

You can consult the types of deduction for investments in the Canary Islands and their particularities at Chapter 12 of this Practical Manual.