Canary Islands tax system

1. Deduction for investment in cinematographic production

With effect for tax periods beginning on or after 1 January 2021, the First Final Provision of Law 14/2021, of 11 October, which modifies Royal Decree-Law 17/2020, of 5 May, which approves support measures for the cultural sector and of a tax nature to address the economic and social impact of COVID-2019 , modifies the Fourteenth Additional Provision of Law 19/1994, of 6 July, modifying the Economic and Fiscal Regime of the Canary Islands, to update the limits applicable to deductions for investments in film productions and audiovisual series made in the Canary Islands .

Thus, it is established that the amount of the deduction for investments in Spanish productions of feature films and short films and audiovisual series of fiction, animation or documentary regulated in article 36.1 of the LIS , may not be higher than the result of increasing by 80 percent the maximum amount referred to in said article when it comes to productions made in the Canary Islands .

Furthermore, it is established that the amount of the deduction for expenses incurred in Spanish territory for foreign productions of feature films or audiovisual works regulated in article 36.2 of the LIS, as well as the amount of the deduction for expenses incurred in the production and exhibition of live shows of performing and musical arts referred to in article 36.3 of the LIS, may not be higher than the result of increasing by 80 percent the maximum amount referred to in said articles when it concerns expenses incurred in the Canary Islands .

2. Tax regime for ships and shipping companies in the Canary Islands

With effect for tax periods beginning on or after 1 January 2021 that have not ended on 11 July 2021, Law 11/2021, of 9 July, on measures to prevent and combat tax fraud, adds section 3 to article 73 of Law 19/1994, of 6 July, amending the Economic and Tax Regime of the Canary Islands, to establish that vessels of shipping companies registered in the Special Register of Vessels and Shipping Companies that were registered in another Member State of the European Union or the European Economic Area, are also considered to be registered in the Special Register, provided that they comply with the requirements that are required of the rest of the vessels for their registration.

Furthermore, article 76 of Law 19/1994, of July 6, amending the Economic and Fiscal Regime of the Canary Islands, which regulates the bonuses applicable to the full amount of the Corporate Tax for shipping companies in the Canary Islands, is amended, introducing a limitation on said applicable bonuses. For these purposes, it is established that when the part of the tax base that comes from the performance of activities closely related to maritime transport exceeds the part of the tax base resulting from the activities that generate the right to apply the special regime, the quota corresponding to said excess may not be subject to a bonus . This limitation shall apply to each of the vessels whose operation generates the right to the bonus.

Finally, it is added in said article 76 of Law 19/1994, of July 6, that the negative tax bases derived from the activities that generate the right to apply the special regime for ships and shipping companies in the Canary Islands, may not be offset with positive tax bases derived from the rest of the entity's activities , neither in the current year nor in subsequent years.