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Practical Manual of Companies 2022.

Deduction for investments in foreign cinematographic production

Regulation: Article 36.2 LIS and 94 Law 20/1991 and DA 14 Law 19/1994

  • To apply the deduction for investments in foreign productions of feature films or audiovisual works that allow the preparation of a physical medium prior to serial industrial production carried out in the Canary Islands, entities must meet the general requirements established for these deductions in article 36.2 of the LIS .

  • Percentages

    The deduction percentages established in article 36.2 of the LIS will increase according to the provisions of article 94.1 a) of Law 20/1991 , Therefore, the following percentages will be applied:

    • The 54 percent with respect to the first million base of the deduction (the greater of: 30% x 1.8 = 54% or 30% + 20% = 50%). This 54 percent percentage may be applied provided that the aid intensity does not exceed 50 percent of the eligible costs , in the terms established by article 54 of Commission Regulation ( EU ) No. 651/2014, of June 17, 2014, declaring certain categories of aid compatible with the internal market in application of Articles 107 and 108 of the Treaty.

      45 percent on the excess of said amount (the greater of 25% x 1.8 = 45% or 25% + 20% = 45%).

    • The 54 percent of the base of the deduction (the greater of: 30% x 1.8 = 54% or 30% + 20% = 50%), when the producer is in charge of the execution of visual effects services and the expenses incurred in Spanish territory are less than 1 million euros .

  • Limits

    In accordance with the provisions of article 36.2 of the LIS, which establishes that the deduction for investments in foreign film productions is excluded from the limit referred to in the last paragraph of article 39.1 of the LIS, the limits applicable to this deduction will not be increased in accordance with the provisions of article 94.1.b) of Law 20/1991 , therefore that this deduction will not be subject to the joint limit of 60/90 or 70/100 (La Palma, La Gomera and El Hierro) percent.

    However, Additional Provision fourteenth of Law 19/1994 establishes, with effect for tax periods beginning on or after January 1, 2021, the following specific limits for this deduction:

    • The amount of the deduction for expenses incurred in Spanish territory for foreign productions of feature films or audiovisual works may not be higher than the result of increasing by 80 percent the maximum amount referred to in article 36.2 of the LIS, in the case of expenses incurred in the Canary Islands. Therefore, the maximum amount of this deduction will be 18 million euros (10 million euros x 1.8).

    • In relation to the deduction generated by the execution of visual effects services by the producer , the provisions of letter b) of article 36.2 of the LIS will apply, that is, the The amount of this deduction may not exceed the amount established by Commission Regulation (EU) 1407/2013, of December 18, 2013, relating to the application of articles 107 and 108 of the Treaty on the Functioning of the European Union to minimis aid.

    • Finally, it is established regarding the minimum amount of expense established by letter a) of article 36.2 of the LIS, that the expenses incurred in the Canary Islands for animation of a foreign production must be greater than 200,000 euros .