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Practical Manual for 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 creation of a physical support prior to their serial industrial production carried out in the Canary Islands, entities must comply with 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 be increased according to the provisions of article 94.1 a) of Law 20/1991 , so the following percentages will apply:

    • 54 percent of the first million of the deduction base (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%).

    • 54 percent of the deduction base (the greater of: 30% x 1.8 = 54% or 30% + 20% = 50%), when the producer is responsible for 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 , so 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, the Fourteenth Additional Provision 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 exceed the result of increasing by 80 percent the maximum amount referred to in article 36.2 of the LIS, when it concerns 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 producer , the provisions of letter b) of article 36.2 of the LIS will apply, that is, the amount of this deduction may not exceed the amount established by Commission Regulation (EU) 1407/2013 of 18 December 2013 on the application of Articles 107 and 108 of the Treaty on the Functioning of the European Union to de minimis aid .

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