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Practical Handbook for Companies 2021

Practical example of deductions

Company A, whose financial year is twelve months long and coincides with the calendar year, has the following data when filing its corporate income tax return for 2021:

  1. The gross tax liability, less deductions for double taxation and allowances (box [00582] "Positive adjusted gross tax liability" on page 14 of form 200), is 100,000 euros.

  2. The following deductions from previous periods are still to be applied:

    • Fiscal year 2014For reversal of profits:20,000 euros.

    • Fiscal year 2015For research and development expenditure:2,000 euros.

    • Fiscal year 2016For donations to UNICEF:1,000 euros.

    • Fiscal year 2017For job creation for workers with disabilities:3,300 euros.

    • Fiscal year 2018For her participation in the Universo Mujer programme:1,800 euros.

    • Fiscal year 2019For expenditure on technological innovation:2,500 euros.

  3. During the financial year 2021, it has made investments in the Canary Islands for the acquisition of tangible fixed assets which, in accordance with the provisions of Law 20/1991, entitle it to a deduction of 2,000 euros.

  4. The amount of the deduction for research and development activities corresponding to expenses and investments made in 2021 amounts to 21,000 euros (it exceeds 10 per cent of the total tax liability for 2021 minus deductions for the avoidance of double taxation and allowances).In the financial year 2021, it does not invest in technological innovation.

Solución:

Positive adjusted gross tax liability (box [00582]):100,000 euros

Application of deductions:

  • For reversal of profits 2014 (outstanding balance):20,000

    Applies:20,000

  • For research and development expenditure 2015 (outstanding balance):2.000

    Applies (1): 2.000

  • For donations to UNICEF 2016 (outstanding balance):1,000

    Applies:1,000

  • For job creation for workers with disabilities 2017 (outstanding balance):3.300

    Applies (1):3,300

  • For their participation in the Universo Mujer 2018 programme (balance outstanding):1.800

    Applies (1):1,800

  • For expenditure on technological innovation 2019 (outstanding balance):2.500

    Applies (1):2,500

  • For investments in the Canary Islands made en 2021:2.000

    Applies (2): 2.000

  • For research and development expenditure 2021: 21.000

    (1) (3) applies:20,400

Calculation of positive net quota:

Full tax liability, less deductions for double taxation and allowances = 100,000 euros

(-) Deductions applied = 53.000 euros

Positive net amount (box [00582]) = 47,000 euros

Notes for the example:

(1) The joint limit of the deductions of Chapter IV of Title VI of the LIS amounts to 50,000 euros.In accordance with the provisions of article 39 of the LIS, the amount of the deduction for research and development and technological innovation activities exceeds 10 per cent of the positive adjusted gross tax liability, rising from 25 per cent to 50 per cent.(back to research 2015) (back to creation) (back to participation) (back to innovation) (back to research 2020)

(2) The applicable limit according to Law 20/1991 is 50 per cent of the positive adjusted gross tax liability (50,000 euros).(Go back)

(3) This deduction cannot be applied in its entirety because it exceeds the aforementioned joint limit.(Go back)

Completion of the tax return for the financial year 2021 (tables pages 16 bis, 17 and 18 of form 200).

Deductions for investment in the Canary Islands with increased limits
Total [00886] 2.000 [00590] 2.000 [00887] 0
DeductionsDeduction pending
generated
Applied in this
liquidation
Pending implementation in
future periods
2021:Investments in the Canary Islands
(Law 20/1991)
[00217] 2,000 [00218] 2,000 [00219] 0
Deductions to encourage certain activities
(Chap. IV Tit. VI, DT 24ª.3 LIS and art. 27.3 primero Ley 49/2002)
Total [00831] 51.600 [00588] 51.000 [00832] 600
DeductionsDeduction pending
generated
Applied in this
liquidation
Pending implementation in
future periods
2014:Sum of deductions Ch. IV Tit.VI
Law 43/95 and RDLeg. 4/2004
[01063] 20,000 [01064] 20,000 [01065] 0
2015:Research and development (RTD) [00986] 2,000 [00810] 2,000 [00507] 0
2016:Sum of deductions Ch. IV Tit.VI
Law 43/95, RDLeg.4/2004 and LIS (except for R&D&I)
[01614] 1,000 [01615] 1,000 [01616] 0
2017:Sum of deductions Ch. IV Tit.VI
Law 43/95, RDLeg.4/2004 and LIS
[01847] 3,300 [01848] 3,300 [01849] 0
2018:Sum of deductions Ch. IV Tit.VI
Law 43/95, RDLeg.4/2004 and LIS (except for R&D&I)
[02218] 1,800 [02219] 1,800 [02220] 0
2019:Technological innovation (IT) [02359] 2,500 [02360] 2,500 [02361] 0
2021:Research and development (RTD) [00798] 21,000 [00799] 20,400 [00800] 600