Deduction for investment in cinematographic production

In relation to the deduction for investments in Spanish film productions of feature films and short films and audiovisual series of fiction, animation or documentary, Law 11/2020, of December 30, on the General State Budget for the year 2021, with effect for tax periods beginning on or after January 1, 2021, modifies letter a') of article 36.1 of the LIS , adding that the certificates required in said letter will be binding on the tax administration, regardless of the date on which they were issued .

On the other hand, the last paragraph of article 39.1 of the LIS is modified, adding that the increased deduction limit of 50 percent will be applied taking into account the deduction for investments in film productions, audiovisual series and live shows of performing and musical arts regulated in article 36 of the LIS, when the amount of these deductions exceeds 10 percent of the total account reduced by deductions to avoid international double taxation and bonuses.

Section 5 of article 39 of the LIS is also amended to establish, in relation to the requirement of permanence of the assets affected by the deductions to encourage certain activities regulated in articles 35 to 38 of the LIS, that in the case of the deduction for investments in cinematographic productions, audiovisual series and live shows of performing and musical arts regulated in article 36 of the LIS, said requirement will be deemed to be met to the extent that the producer maintains the same percentage of ownership of the work for the period of 3 years , without prejudice to its power to market all or part of the exploitation rights derived from it to one or more third parties.

Finally, section 7 is added to article 39 of the LIS, which extends the application of the deductions regulated in sections 1 and 3 of article 36 of the LIS to the taxpayer who participates in the financing of Spanish productions of feature films and short films and audiovisual series of fiction, animation, documentaries or production and exhibition of live shows of performing and musical arts carried out by another taxpayer. The taxpayer who participates in the financing of said productions must provide amounts as financing, to cover all or part of the production costs without acquiring intellectual property rights or other rights with respect to the results thereof, the ownership of which must in all cases belong to the producer. These contributions can be made at any stage of production until the nationality certificate is obtained.

In relation to the deduction for investments in foreign productions of feature films or audiovisual works , Law 11/2021, of July 9, on measures to prevent and combat tax fraud, with effect for tax periods beginning on or after January 1, 2021, incorporates in article 36.2 of the LIS, some of the requirements that must be met by producers in charge of the execution of foreign productions of feature films , in order to apply said deduction.

For these purposes, the certificate issued by the Institute of Cinematography and Audiovisual Arts or by the corresponding body of the Autonomous Community is required, accrediting the cultural nature of the production in order to comply with the provisions of the Communication of the Commission on state aid to cinematographic works and other productions of the audiovisual sector, of November 15, 2013. In addition, requests the incorporation into the credits of the work of the specific filming locations in Spain and the authorization of the use of the title of the work and of graphic and audiovisual press material that expressly includes the specific filming locations or any other production process carried out in Spain, for the realization of activities and the preparation of promotional materials in Spain and abroad for cultural or tourist purposes, which may be carried out by state, autonomous or local entities with powers in matters of culture, tourism and economy.

Finally, the forty-second transitional provision of the LIS is added, which establishes that the requirements regulated in letters b') and c') of article 36.2 of the LIS referred to in the previous paragraph will not be required in the case of foreign productions of feature films and audiovisual works for which the contract by which the execution of the production is commissioned had been signed prior to the date of entry into force (11-07-2021) of the Law on measures to prevent and combat tax fraud .