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Practical Manual of Companies 2022.

Deduction for investments in the Canary Islands

Entities with tax domicile in the Canary Islands have the right to apply a series of deductions for investments made and that remain in the Canary Islands, for which article 94 of Law 20/1991, of June 7, modifying the fiscal aspects of the Economic Fiscal Regime of the Canary Islands, establishes in the Corporate Tax the particularity consisting of the application of percentages and deduction limits higher than those established in the general deduction regime:

  • The applicable rates on investments made will be 80 percent higher than those of the general regime, with a minimum differential of 20 percentage points.

  • The deduction for investment in the Canary Islands will have as a maximum limit the percentage indicated below of the liquid quota resulting from reducing the full quota by the amount of the deductions for double taxation and, in where applicable, the bonuses provided for in article 25 of Law 61/1978, of December 27, on Corporate Tax (currently, articles 33 and 34 of the LIS ). Such percentage will always be 80 percent higher than that set for each modification of the investment deduction in the general regime with a minimum differential of 35 percentage points. Therefore, the limit of the deduction is established at 60 percent of the net amount of the tax period, which rises to 90 percent when the amount of deductions for research and development and technological innovation activities and for investments in film productions, audiovisual series and live performances of performing and musical arts, which correspond to expenses and investments made in the tax period itself, exceed 10 percent of said liquid quota.


With effect for tax periods beginning on or after November 7, 2018 , for the islands of La Palma, La Gomera and El Hierro the joint limits of 60 per 100 and 90 per 100 rise , respectively, to 70 per 100 and 100 100 , provided that the community regulations on state aid allow it and they are investments contemplated in Law 2/2016, of September 27 and other laws on measures for the organization of the economic activity of these islands.

Entities that have the right to apply deductions for investments made in the Canary Islands will enter their amount in box [00590] “Canary Islands Investment Deductions” on page 14 of form 200. The amount entered in this box will be the result of completing breakdown table "Investment deductions in the Canary Islands with increased limits" on pages 16 bis and 17 of form 200.

You can consult the deduction modalities for investments in the Canary Islands and their particularities in Chapter 12 of this Practical Manual.