Deduction applicable to the taxpayer who participates in the financing of Spanish film productions and live shows (art. 39.7 LIS)

With effect for tax periods beginning on or after 1 January 2021, the taxpayer who participates in the financing of Spanish productions of feature and short films and audiovisual series of fiction, animation, documentaries or production and exhibition of live performing arts and musical shows made by other taxpayers , may apply the deductions provided for in sections 1 and 3 of article 36 of the LIS , under the conditions and terms indicated therein, their amount being determined under the same conditions as they would have been applied to the producer, provided that they have been generated by the latter. The provisions of article 39.7 of the LIS will not apply when the taxpayer who participates in the financing is linked , within the meaning of article 18 of the LIS, with the taxpayer who generates the right to the deduction provided for in sections 1 and 3 of article 36 of the LIS.

The particularities of this deduction are the following:

1. Requirements

1. Contribution of amounts intended to finance all or part of the production costs, as well as the expenses for obtaining copies, advertising and promotion by the producer up to the limit of 30 percent of the production costs, without acquiring intellectual property rights or other rights with respect to the results of the productions or shows, which must in all cases be owned by the producer.

   The amounts to finance the production costs may be contributed at any stage of production , before or after the producer incurs the aforementioned production costs, and until obtaining the certificates of nationality and the certificate accrediting the cultural character in relation to its content, as well as the one obtained by the National Institute of Performing Arts and Music, as the case may be. The amounts to finance the expenses for obtaining copies, advertising and promotion by the producer referred to in the first paragraph of article 39.7 of the LIS may be contributed before or after the moment in which the producer incurs the aforementioned expenses, but never after the tax period in which the producer incurs them.

   Keep in mind:

   The direct promotional costs referred to in article 36.3 of the LIS must be understood to be included within the expenses for obtaining copies, advertising and promotion.

2. Signing a financing contract

   The producer and the contributors who participate in the financing of the production, must subscribe in any phase of the production one or more financing contracts in which the following details are specified, among others:

   • Identity of the contributors involved in the production and financing.

   • Description of production.

   • Production budget with a detailed description of the expenses and, in particular, those that will be incurred in Spanish territory. The budget for the costs of obtaining copies, advertising and promotion by the producer will also be included, with a detailed description of those to be carried out in Spanish territory.

   • Method of financing of production and of the costs of obtaining copies, advertising and promotion to be borne by the producer, specifying separately the amounts contributed by the producer, those contributed by the taxpayer who participates in its financing and those corresponding to subsidies and other support measures.

3. Communication to the tax authorities

   In addition, in order to apply this deduction, the taxpayer participating in the financing must submit the financing contract and certification of compliance with requirements a') and b') of section 1 or requirement a) of section 3 of article 36 of the LIS, as appropriate, in a communication to the Tax Administration, signed by both the producer and the taxpayer participating in the financing of the production, prior to the end of the tax period in which the latter is entitled to apply the deduction.

2. Amount of deduction

The taxpayer who participates in the financing of the aforementioned productions may apply the deduction in his self-assessment, its amount being determined under the same conditions as those applied to the producer, provided that they have been generated by the latter. However, the maximum amount of the deduction that may be applied by the taxpayer who participates in the financing will be the result of multiplying by 1.20 the amount of the sums that the latter has contributed to finance the aforementioned production costs or the expenses for obtaining copies, advertising and promotion at the expense of the producer referred to in the previous paragraphs. The excess deduction may be applied by the producer who has generated the right to it.

The amount of the deduction applied by the taxpayer participating in the financing must be taken into account for the purposes of applying joint limit 25 percent established in article 39.1 of the LIS. This limit will be raised to 50 percent when the amount of the deduction provided for in sections 1 and 3 of article 36 of the LIS, which corresponds to the taxpayer who participates in the financing, is equal to or greater than 25 percent of its full share reduced by deductions to avoid international double taxation and bonuses.

3. Application of the deduction

This deduction will not apply when the taxpayer participating in the financing is linked , within the meaning of article 18 of the LIS, with the taxpayer who generates the right to the deduction provided for in sections 1 and 3 of article 36 of the LIS.

The application of the deduction by the taxpayer participating in the financing will be incompatible , totally or partially, with the deduction to which the producer would be entitled by application of the provisions of sections 1 and 3 of article 36 of the LIS.

Filling in form 200

The taxpayer who participates in the financing of the production and wants to prove his right to apply the deduction of sections 1 and 3 of article 36 of the LIS , must first mark the box [00074] "Taxpayer who finances productions with the right to the deduction of art. 36.1 and 36.3 LIS" on page 1 of form 200.

In addition to checking box [00074], the taxpayer who participates in the financing of the production, in order to apply the deduction provided for in sections 1 and 3 of article 36 of the LIS , must enter in section "Additional information on Spanish film productions and live shows" on page 18 of form 200, the NIF of the taxpayer who carries out the production or show that he finances.

Regarding the settlement of the tax, the taxpayer who participates in the financing must complete the boxes [02462] «2022: Funder: Spanish film productions» and [02455] «2022: Funder: live shows of performing and musical arts" on page 17 of form 200 when in the tax period beginning in 2022 it has generated the right to the deduction of article 36.1 or 36.3 of the LIS, respectively. This amount may not be included in the model 200 submitted by the producer, that is, the producer in the boxes [00807] «2022: Producer: Spanish film productions» and [01075] «2022: Producer: "live shows of performing and musical arts" on page 17 of form 200, you may only complete the amount of the deductions of articles 36.1 and 36.3 of the LIS that will be applied in your settlement, as a producer, when you meet the requirements regulated in the aforementioned articles to be able to do so. In addition, the taxpayer participating in the financing must complete in boxes [02463] and [02456] on page 17 of form 200, the amount of the deductions of articles 36.1 and 36.3 of the LIS that he applies in his liquidation for having complied with the requirements provided for in the aforementioned articles. Finally, boxes [02464] and [02457] on page 17 of form 200 will be completed for the amount resulting from reducing the deduction pending or generated in 2022 by the amount of the deduction that has been applied in the settlement of the tax period being declared.