Deduction for investment in cinematographic production

In relation to the deduction for investments in Spanish cinematographic productions of feature films and short films and audiovisual series of fiction, animation or documentaries, Law 11/2020, of December 30, on Budgets General of the State for the year 2021, with effects for the tax periods that begin on January 1, 2021, modifies letter a') of article 36.1 of the LIS , adding that the certificates required in said letter will be binding for 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 limit of the deduction to 50 percent will be applied based on the deduction for investments in cinematographic productions, audiovisual series and shows in live performing and musical arts regulated in article 36 of the LIS, when the amount of these deductions exceeds 10 percent of the full account reduced in deductions to avoid international double taxation and bonuses.

Section 5 of article 39 of the LIS is also modified to establish in relation to the requirement of permanence of the assets subject to deductions to encourage certain activities regulated in articles 35 to 38 of the LIS, that in the case of deduction for investments in cinematographic productions, audiovisual series and live performances of performing and musical arts regulated in article 36 of the LIS, said requirement will be understood to be fulfilled to the extent that the production company maintains the same percentage of ownership of the work for a period of 3 years , without prejudice to its power to fully or partially commercialize 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 performances of performing and musical arts carried out by another taxpayer. The taxpayer who participates in the financing of said productions must contribute amounts as financing to cover all or part of the costs of the production without acquiring intellectual or other property rights regarding the results thereof, whose ownership In any case, it must be from 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 effects for tax periods that begin on or after January 1, 2021, incorporates in article 36.2 of the LIS, some of the requirements that must be met by producers responsible for the execution of foreign productions of cinematographic feature films , in order to apply said deduction.

For these purposes, the certificate issued by the Institute of Cinematography and Audiovisual Arts is required, or by the corresponding body of the Autonomous Community, accrediting the cultural nature of the production with the in order to comply with the provisions of the Commission Communication on state aid to cinematographic works and other productions in the audiovisual sector, of November 15, 2013. In addition, the incorporation in the credit titles of the work of the specific filming locations in Spain and the authorization of the use of the title of the work and graphic and audiovisual press material are requested. that expressly includes the specific locations of filming or any other production process carried out in Spain, for the carrying out of activities and the preparation of promotional materials in Spain and abroad for cultural or tourist purposes, which may be carried out by the state, regional 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, to which reference has been made in the previous paragraph, will not be enforceable. in the case of foreign productions of feature films and audiovisual works in respect of which the contract for the execution of the production 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 .