Practical examples

Example 1

Company "A" whose net turnover in the 12 months prior to the date on which the tax period begins exceeded 20 million euros, has a tax base of 2,000,000 euros and is taxed at the general rate 25 percent tax. In fiscal year 2022, said company has generated the right to apply the following deductions:

• Deduction to avoid international double taxation: 150,000 euros
• R&D&I deduction (art. 35 LIS ): 80,000 euros

• Liquidation of Corporate Tax in fiscal year 2022:

Firstly, the company will calculate the limit applicable to deductions for double taxation, which in accordance with the fifteenth additional provision of the LIS in the case of entities with a net amount of turnover in the 12 months prior to the date in which the tax period begins is greater than 20 million euros, it will be 50 percent of the full amount:

Full fee = Tax base (2,000,000) x Tax rate (25%) = 500,000 euros

DAª limit 15 LIS: 50% (500,000) = 250,000 euros

Therefore, the company may apply the entire deduction to avoid double taxation (150,000 euros) without anything remaining pending, as it is less than the limit of 250,000 euros.

Secondly, the company will calculate the limit applicable to the deductions of Chapter IV of Title VI of the LIS regulated in article 39.1 of the LIS, that is, 25 percent of the positive adjusted full quota (full quota less deductions for double taxation and bonuses). If the amount of the deductions of articles 35 and 36 of the LIS generated in the tax period is greater than 10 percent of the total positive adjusted quota, the 25 percent limit is raised to 50 percent of the full quota positive adjusted.

Checking the limit in this case:

R&D&i deduction (art. 35 LIS): 80,000 euros

10% (500,000 – 150,000) = 35,000 euros

80,000 euros > 35,000 euros, so the company will apply the joint limit of 50 percent:

Art. limit 39.1 LIS: 50% (500,000 – 150,000) = 175,000 euros

Therefore, the company can apply the full amount of the R&D&i deduction (80,000 euros) in fiscal year 2022.

The company, if the minimum tax is not applicable, would complete the liquidation of the Corporate Tax in the year 2022 in the following way:

However, in this case, since minimum taxation is applicable, the company must calculate the amount of the minimum net tax, in accordance with the provisions of article 30 bis of the LIS. 

Firstly, the company will calculate the minimum liquid quota in accordance with the provisions of section 1 of article 30 bis of the LIS and secondly it will calculate the quota in accordance with the rules contained in section 2 of said article. The lowest amount obtained will be considered the minimum liquid quota.

Therefore, in this specific case, the lower amount is the one calculated according to the provisions of article 30 bis.1 of the LIS (300,000 euros) so this amount will be considered the minimum liquid quota. Since the fee calculated according to the provisions of article 30 bis.2 of the LIS (350,000 euros) is higher than that of article 30 bis.1 of the LIS, the company may continue applying deductions up to the limit of 300,000 euros (except in the case of deductions whose amount is determined in accordance with Law 20/1991, of June 7, modifying the fiscal aspects of the Economic Fiscal Regime of the Canary Islands, and Law 19/1994, of July 6, modifying the Economic and Fiscal Regime of the Canary Islands, which have a special regime), in accordance with the provisions of letter b) of article 30 bis.2 of the LIS.

According to the provisions of letter b) article 30 bis.2 of the LIS, in this specific case there are 50,000 euros left to reach the amount of 15 percent of the tax base (minimum liquid quota), once the full quota has been reduced by the following amounts:

• Bonuses 
• Deduction for investments made by port authorities (art. 38 bis LIS) 
• Double taxation deduction 

Therefore, a 50,000 euros R&D&I deduction may be applied in application of article 30 bis of the LIS, since once all the concepts contained in said article have been reduced, the resulting amount is 350,000 euros, so there is a difference of 50,000 euros that allows 50,000 euros of the aforementioned deduction to be applied until reaching the amount of 300,000 euros of minimum liquid quota.

In this case, the minimum net amount (300,000 euros) is higher than the net amount (270,000 euros) that would correspond without minimum taxation , so the amount that must be taxed as net amount will be 300,000 euros, not allowing the full application of the R&D&i deduction (80,000 euros), but 50,000 euros. Therefore, there are 30,000 euros of the R&D&I deduction generated in 2022 pending to be applied in future tax periods.

Taking all of the above into account, the Web Companies program would recalculate the liquid quota, so the liquidation that the company must finally present once the provisions of article 30 bis of the LIS are taken into account will be:

Example 2

Company "B" whose net turnover in the 12 months prior to the date on which the tax period begins exceeded 20 million euros, has a tax base of 1,000,000 euros and is taxed at the general rate 25 percent tax. In fiscal year 2022, said company has generated the right to apply the following tax incentives:

• Bonus for income obtained in Ceuta and Melilla: 20,000 euros
• Deduction to avoid international double taxation: 10,000 euros
• Deduction for investments made by port authorities (art. 38 bis LIS) that does not give rise to non-deductible expenses: 90,000 euros
• R&D&i deduction (art. 35 LIS): 100,000 euros

The following deductions are pending application:

• R&D&i deduction (art. 35 LIS) pending for fiscal year 2021: 187,500 euros (the requirements to request advance payment of art. 39.2 LIS are met)
• Deduction for job creation (art. 37 LIS) pending from previous years: 150,000 euros

In addition, the company may deduct withholdings in the amount of 20,000 euros and installment payments of 10,000 euros.

• Liquidation of Corporate Tax in fiscal year 2022

Firstly, the company will calculate the limit applicable to deductions for double taxation, which in accordance with the fifteenth additional provision of the LIS in the case of entities with a net amount of turnover in the 12 months prior to the date in which the tax period begins is greater than 20 million euros, it will be 50 percent of the full amount:

Full fee = Tax base (1,000,000) x Tax rate (25%) = 250,000 euros

DAª limit 15 LIS: 50% (250,000) = 125,000 euros

Therefore, the company may apply the entire deduction to avoid double taxation (10,000 euros) without anything remaining pending, as it is less than the limit of 125,000 euros.

Secondly, the company will calculate the limit applicable to deductions in Chapter IV of Title VI of the LIS established in article 39.1 of the LIS. If the amount of the deductions of articles 35 and 36 of the LIS generated in the tax period is greater than 10 percent of the total positive adjusted quota (full quota less deductions for double taxation and bonuses), the limit of the 25 percent rises to 50 percent of the positive adjusted full quota.

Checking the limit in this case:

R&D&i deduction (art. 35 LIS): 100,000 euros

10% (250,000 – 20,000 - 10,000) = 22,000 euros

100,000 euros > 22,000 euros, so the joint limit of 50 percent will apply:

Art. limit 39.1 LIS: 50% (250,000 – 20,000 - 10,000) = 110,000 euros

According to the above, the amount of the R&D&i deduction (100,000 euros) exceeds 10 percent of the full quota (22,000 euros), so the limit of the deduction will be 50 percent of the quota. in full (110,000 euros). Therefore, only 110,000 euros can be applied in this settlement for all deductions from Chapter IV of Title VI of the LIS.

The company will have to decide how to apply the limit of 110,000 euros. We understand that the most beneficial option for it would be to first apply the deduction for job creation (art. 37 LIS) because it comes from previous years and the company has 15 years to apply it instead of the 18 years in which it can be applied. the R&D&i deduction (art. 35 LIS). Furthermore, due to the deduction for job creation (art. 37 LIS) you do not have the possibility of requesting advance payment. Therefore, in fiscal year 2022, the company can apply 110,000 euros corresponding to the deduction for job creation (art. 37 LIS), leaving 40,000 euros pending for future periods. In addition, the amount of 100,000 euros corresponding to the R&D&i deduction (art. 35 LIS) generated in 2022 will remain pending to be applied for future periods.

The deduction for investments made by port authorities (art. 38 bis LIS) is outside the limit established in article 39.1 of the LIS, so, given that there is a sufficient full quota, the company may apply the 90,000 euros deduction.

For the R&D&i deduction pending in 2021, upon meeting the requirements of art. 39.2 LIS, the company can exclude it from the limit of article 39.1 of the LIS and apply it with a discount of 20 percent of its amount. As there is insufficient quota, the company can request payment of the corresponding part. Therefore, 80 percent of 187,500 euros will be deducted, that is, 150,000 euros (20,000 reducing the fee and 130,000 as an advance payment).

The company, if the minimum tax is not applicable, would complete the liquidation of the Corporate Tax in the year 2022 in the following way:

However, in this case, since minimum taxation is applicable, the company must calculate the amount of the minimum net tax, in accordance with the provisions of article 30 bis of the LIS.

Firstly, the company will calculate the minimum liquid quota in accordance with the provisions of article 30 bis.1 of the LIS (150,000 euros) and secondly it will calculate the quota in accordance with the rules set out in article 30 bis. .2 of the LIS (130,000 euros). The lowest amount obtained will be considered the minimum liquid quota.

Therefore, in this specific case, the lower amount is the one calculated according to the provisions of letter a) of article 30 bis.2 of the LIS (130,000 euros), so this amount will be considered the minimum liquid quota.  From the minimum liquid quota, the company will not be able to continue applying deductions (except in the case of deductions whose amount is determined in accordance with Law 20/1991, of June 7, modifying the tax aspects of the Economic Tax Regime of the Canary Islands, and Law 19/1994, of July 6, modifying the Economic and Fiscal Regime of the Canary Islands, which have a special regime), in accordance with the provisions of letter b) of article 30 bis.2 of the LIS.

According to article 30 bis of the LIS, in this specific case, given the amount of the resulting minimum liquid quota, the rest of the deductions cannot be applied to the full quota, once the full quota has been reduced by the following amounts:

• Bonuses 
• Deduction for investments made by port authorities (art. 38 bis LIS) 
• Double taxation deduction 

Therefore, the company will not be able to apply the deduction for job creation (article 37 LIS) in application of the provisions of article 30 bis of the LIS, since once all the concepts contained in said article have been reduced, the amount that results from 130,000 euros is less than the 150,000 euros that results from multiplying the amount of 15 percent of the tax base (minimum net amount). In this case, the minimum liquid contribution will be 130,000 euros, so the amount that must be taxed as liquid contribution will be 130,000 euros, not allowing the application of the 150,000 euros corresponding to the deduction of article 37 of the LIS, nor of the 100,000 euros of the R&D&I deduction (article 35 LIS) generated in this fiscal year 2022, leaving 250,000 euros pending application for future periods.

Regarding the R&D&I deduction generated in 2021, the option to exclude it from the limit of article 39.1 of the LIS and apply it with a discount of 20 percent of its amount is not affected by the amount. of the minimum liquid quota, so that if there is sufficient quota, the company may apply 130,000 euros of the 150,000 euros pending (80% of 187,500 euros) and request payment of the remaining 20,000 euros.

Taking all of the above into account, the Web Companies program would recalculate the liquid quota, so the liquidation that the company must finally present once the provisions of article 30 bis of the LIS are taken into account will be:

Example 3

The "C" company whose net turnover in the 12 months prior to the date on which the tax period begins exceeded 20 million euros, has a tax base of 2,000,000 euros and is taxed at the general rate 25 percent tax. In fiscal year 2022, said company has generated the right to apply the following tax incentives:

• Deduction to avoid international double taxation: 45,000 euros
• R&D&i deduction (art. 35 LIS): 30,000 euros

• Liquidation of Corporate Tax in fiscal year 2022

Firstly, the company will calculate the limit applicable to deductions for double taxation, which in accordance with the fifteenth additional provision of the LIS in the case of entities with a net amount of turnover in the 12 months prior to the date in which the tax period begins exceeds 20 million euros, it will be 50 percent of the full amount:

Full fee = Tax base (2,000,000) x Tax rate (25%) = 500,000 euros

DAª limit 15 LIS: 50% (500,000) = 250,000 euros

Therefore, the company will be able to apply the entire deduction to avoid double taxation (45,000 euros) without anything remaining pending, as it is less than the limit of 250,000 euros.

Secondly, the company will calculate the limit applicable to deductions in Chapter IV of Title VI of the LIS established in article 39.1 of the LIS. If the amount of the deductions of articles 35 and 36 of the LIS is greater than 10 percent of the positive adjusted full quota, the 25 percent limit is raised to 50 percent of the positive adjusted full quota.

Checking the limit in this case:

R&D&i deduction (art. 35 LIS): 30,000 euros

10% (500,000 - 45,000) = 45,500 euros

30,000 euros < 45,500 euros, so the joint limit of 25 percent will apply:

Art. limit 39.1 LIS: 25% (500,000 - 45,000) = 113,750 euros

Therefore, the company can apply the full amount of the R&D&i deduction (30,000 euros) in fiscal year 2022.

The company, if the minimum tax is not applicable, would complete the liquidation of the Corporate Tax in the year 2022 in the following way:

However, in this case, since minimum taxation is applicable, the company must calculate the amount of the minimum net tax in accordance with the provisions of article 30 bis of the LIS.

Firstly, the company will calculate the minimum liquid quota in accordance with the provisions of article 30 bis.1 of the LIS (300,000 euros) and secondly it will calculate the quota in accordance with the rules set out in letter a) of article 30 bis.2 of the LIS (455,000 euros). The lowest amount obtained will be considered the minimum liquid quota.

Therefore, in this specific case, the lower amount is the one calculated in accordance with article 30 bis.1 of the LIS (300,000 euros), so this amount will be considered the minimum liquid quota. The company, in accordance with the provisions of letter b) of article 30 bis.2 of the LIS, may continue to apply deductions with a limit of 155,000 euros (except in the case of deductions whose amount is determined in accordance with Law 20/ 1991, of June 7, modifying the fiscal aspects of the Economic and Fiscal Regime of the Canary Islands, and Law 19/1994, of July 6, modifying the Economic and Fiscal Regime of the Canary Islands, which have a special regime), which is the difference between the amount resulting from applying letter a) of article 30 bis.2 of the LIS (455,000 euros) and the amount resulting from applying article 30 bis.1 of the LIS (300,000 euros).

According to article 30 bis of the LIS, in this specific case there are 155,000 euros left to reach the amount of 15 percent of the tax base, once the full quota has been reduced by the following amounts

• Bonuses 
• Deduction for investments made by port authorities (art. 38 bis LIS) 
• Double taxation deduction 

In this specific case, the minimum liquid quota is 300,000 euros because in accordance with the provisions of section 2 of article 30 bis LIS, the amount is not less than that calculated in accordance with section 1 of said article. Therefore, in application of the provisions of section 1 of article 30 bis of the LIS, the minimum liquid quota will be 300,000 euros.

The net amount may not be less than the amount resulting from applying article 30 bis of the LIS.

When comparing the liquid quota (425,000 euros) with the minimum liquid quota (300,000), we note that the liquid quota is not less than the minimum liquid quota, so in this case, the amount that will be taken into account to continue the liquidation of the Corporate Tax will be €425,000.

Therefore, the 30,000 euros corresponding to the R&D&i deduction (art. 35 LIS) may be applied, leaving nothing pending for future periods.

Taking all of the above into account, Web Companies will not recalculate the net amount, so the settlement that the company must finally present once article 30 bis of the LIS has been taken into account will be as follows (in this case, the amount of the minimum liquid quota box will be different from the liquid quota box):