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Practical Manual of Companies 2022.

Special cases

  1. article 94.1 of Law 20/1991, of June 7 establishes that companies and other legal entities subject to Corporate Tax, with tax domicile in the Canary Islands, may be eligible from the first financial year closed after December 31, 1991, and in relation to the investments made and that remain in the Archipelago, to Deduction regime provided for in article 26 of Law 61/1978, of December 27, on Corporate Tax, in accordance with the following features:

    1. 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.

    2. Deduction for investment in the Canary Islands, will have as maximum limit the percentage indicated below of the liquid quota resulting from reducing the full quota in the amount of deductions for double taxation and, where appropriate case, the bonuses provided for in article 25 of Law 61/1978, of December 27, on Corporate Tax. 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. However, on the islands of La Palma, La Gomera and El Hierro, the minimum limit of 80 percent will be increased to 100 percent and the minimum differential will go to 45 percentage points when 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.

  2. On the other hand, article 94.2 of Law 20/1991 establishes that the investment deduction regime of this article will also apply to companies and other legal entities that do not have their tax domicile in the Canary Islands , with respect to the permanent establishments located in this territory and provided that the investments corresponding are made and remain in the Archipelago .

    In these cases, the maximum deduction limit on the liquid quota referred to in article 94.1.b) of Law 20/1991, will be applied independently of the corresponding amount for the investments under the general regime.

    This same criterion will also apply to investments made in peninsular territory or the Balearic Islands , through permanent establishments, by entities domiciled in the Canary Islands.