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 January 1, 2021, 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 shows in live performing and musical arts made by other taxpayers , may apply the deductions provided for in sections 1 and 3 of article 36 of the LIS , in the conditions and terms indicated therein, the amount being determined under the same conditions that would have been applied to the producer, provided that they have been generated for the latter. The provisions of article 39.7 of the LIS will not apply when the taxpayer participating in the financing is linked , in the sense 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 borne by the producer up to the limit of 30 percent of production costs, without acquiring intellectual or other property rights regarding the results of productions or shows, whose property must in any case be of the producer.

   The amounts to finance production costs may be contributed in any phase of production , before or after the moment in which the producer incurs the aforementioned production costs, and until obtaining of the nationality certificates and the certificate that accredits 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 prior 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 in the expenses for obtaining copies, advertising and promotion.

2. Subscription of a financing contract

   The producer and the taxpayers who participate in the financing of the production, must sign in any phase of the production one or more financing contracts in the that, among others, the following points are required:

   • Identity of the taxpayers participating in production and financing.

   • Description of the production.

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

   • Form of financing of the production and the expenses for obtaining copies, advertising and promotion by the producer, separately specifying the amounts contributed the producer, those contributed by the taxpayer who participates in its financing and those that correspond to subsidies and other support measures.

3. Communication to the tax administration

   Furthermore, in order to apply this deduction, the taxpayer who participates in the financing must present 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 who participates in the financing of the production, prior to the end of the tax period in which the latter has the right to apply the deduction.

2. Deduction amount

The taxpayer who participates in the financing of the aforementioned productions may apply the deduction in their self-assessment, , determining its amount under the same conditions that would have been applied to the producer, provided that have been generated by the latter. However, the maximum amount of the deduction that the taxpayer participating in the financing may apply will be the result of multiplying by 1.20 the amount of the amounts that the latter has contributed to finance the aforementioned production costs or the expenses for obtaining copies, advertising and promotion by 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 the joint limit of 25 percent established in article 39.1 of the LIS. Said 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 participating in the financing, is equal or greater than 25 percent of its full quota reduced by deductions to avoid international double taxation and bonuses.

3. Application of the deduction

This deduction will not be applied when the taxpayer who participates in the financing is linked , in the sense 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 who participates 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 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 deduction under art. 36.1 and 36.3 LIS» on page 1 of model 200.

In addition to checking the box [00074], the taxpayer who participates in the financing of 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 model 200, the NIF of the taxpayer who produces the production or show it finances.

Regarding the settlement of the tax, the taxpayer who participates in the financing must complete the boxes [02462] «2022: Financier: Spanish film productions» and [02455] «2022: Financier: live performances of performing and musical arts» on page 17 of model 200 when in the tax period that begins in 2022 the right to deduction under article 36.1 or 36.3 of the LIS has been generated, respectively. This amount cannot be included in the form 200 presented by the producer, that is, the producer in the boxes [00807] «2022: Producer: Spanish film productions» and [01075] «2022: Producer: live performances 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 liquidation, as a producer, when you meet the requirements regulated in the aforementioned articles to be able to do so. In addition, the taxpayer who participates 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 applies in its liquidation for having complied with the requirements set forth in the aforementioned articles. Finally, boxes [02464] and [02457] on page 17 of form 200 will be completed by the amount resulting from reducing the deduction pending or generated in 2022 in the amount of the deduction that has been applied in the settlement of the tax period that is declared.