RIC case studies
Example 1
In the tax period beginning on January 1 2021 , company "A", domiciled in the Canary Islands, makes a contribution to the RIC in the amount of 1,000 euros from the profits of fiscal year 2021 . During this same period, the company has profits that are not subject to distribution of 1,000,000 euros.
In fiscal year 2022 acquires tangible fixed assets for 1,000 euros that contributes to improving the environment in the Canary Islands.
As in fiscal year 2021 , in fiscal year 2022 company "A" has profits that are not subject to distribution of 1,000,000 euros.
In this case, the reduction that company "A" may apply to its tax base will be limited to 90 percent of the portion of the profit obtained that is not subject to distribution:
Limit: 90% x 1,000,000 euros = €900,000.
Exercise 2021 :
Company "A" makes a provision to the RIC against the profits of fiscal year 2021 for an amount of 1,000 euros (it can do so because it meets the limit, since 1,000 euros < 900,000 euros), so must enter an amount of 1,000 euros in the row "Amount of the RIC provision against profits of 2021 " of the table "Special reserve regime for investments in the Canary Islands (Law 19/1994)" on page 22 of form 200.
In addition, must complete on page 13 of form 200, box [00404] "Reserve for investments in the Canary Islands (Law 19/1994)" (negative adjustment) for an amount of 1,000 euros , since it is the value of the reduction of the tax base for the year 2021 that is made due to the allocation to the RIC.
However, an amount of 1,000 euros remains pending to be materialized in subsequent periods. For this reason, company "A" must complete, in the first box on page 22 of Form 200, column "Pending materialization of RIC in future periods", in the row corresponding to RIC 2021 for the amount of 1,000 euros .
According to the above, company "A" must complete the adjustment on page 13 and the table on page 22 of form 200 for the 2020 fiscal year, as follows:
| Detail of the corrections to the P&L account result (page 13 of form 200) | ||||
|---|---|---|---|---|
|
Canary Islands investment reserve (Law 19/1994) |
[00403] |
--- |
[00404] |
1,000 |
Special reserve regime for investments in the Canary Islands (page 22 of form 200)
| RIC | Pending materialization RIC at the beginning of period | Applied / materialized in this settlement | Pending materialization RIC at the end of the period | ||||
|---|---|---|---|---|---|---|---|
| Planned investments letters A and B, art. 27.4 Law 19/1994 | Planned investments letters B bis, C and D, art. 27.4 Law 19/1994 | Early investments considered materialization of the RIC in this liquidation | |||||
| RIC 2021 | --- | --- | --- | --- | 1,000 | ||
| Amount of the RIC allocation charged to profits of 2021 | |
|---|---|
| [00927] | 1,000 |
Exercise 2022 :
Company "A" does not make any provision to the RIC in this fiscal year, so should not complete the row "Amount of the RIC provision charged to profits of 2022 " of the table "Special reserve regime for investments in the Canary Islands (Law 19/1994)" on page 22 of form 200.
Furthermore, will not have to complete box [00404] "Reserve for investments in the Canary Islands (Law 19/1994)" (negative adjustment) on page 13 of form 200, since the taxable base for fiscal year 2022 will not be reduced due to the allocation to the RIC.
Please note that the investment made by company B in fiscal year 2022 is not considered an early investment, since, although in 2022 no RIC is provided, the investment in this fiscal year is a materialization of the provision of the reserve that was made in 2021 .
At the beginning of financial year 2022 €1,000 remain to be materialized of the provision to the RIC from profits of 2021 made in financial year 2021 , so company "A" must record in the first box on page 22 of Form 200 relating to the Special Reserve Regime for Investments in the Canary Islands (Law 19/1994) column "Pending materialization RIC at the beginning of the period", in the row corresponding to RIC 2021 , the amount of €1,000.
The amount invested in the period 2022 is 1,000 euros, therefore company "A" must complete the first table on page 22 of Form 200 relating to the Special Reserve Regime for Investments in the Canary Islands (Law 19/1994), entering in column "Investments planned letters B bis, C and D, art. 27.4 Law 19/1994", in the row corresponding to the RIC 2021 , the amount of the materialization, that is, 1,000 euros . In fiscal year 2022 , the total amount of the provision made during 2021 is materialized, so there is nothing pending to materialize for future fiscal years. For this reason, company "A" should not complete the column "Pending RIC materialization at the end of the period."
In this way, the adjustment on page 13 and the table on page 22 of model 200 corresponding to fiscal year 2022 , will be completed as follows:
| Detail of the corrections to the P&L account result (page 13 of form 200) | ||||
|---|---|---|---|---|
|
Canary Islands investment reserve (Law 19/1994) |
[00403] |
--- |
[00404] |
0 |
Special reserve regime for investments in the Canary Islands (page 22 of form 200)
| RIC | Pending materialization RIC at the beginning of period | Applied / materialized in this settlement | Pending materialization RIC at the end of the period | ||||
|---|---|---|---|---|---|---|---|
| Planned investments letters A and B, art. 27.4 Law 19/1994 | Planned investments letters B bis, C and D, art. 27.4 Law 19/1994 | Early investments considered materialization of the RIC in this liquidation | |||||
| RIC 2021 | 1,000 | --- | 1,000 | --- | 0 | ||
| Amount of the RIC allocation charged to 2021 profits | |
|---|---|
| [00927] | 0 |
Example 2
In the tax period beginning on January 1, 2021 , company "B", domiciled in the Canary Islands, acquires tangible fixed assets for 1,000 euros that contribute to improving the environment in the Canary Islands.
Company "B" does not make any allocation to RIC ## in fiscal year 2021 ##.
In 2022 , it does not make any investment in which the RIC can materialize, although, against the profits of 2022 , company "B" records in 2023 a provision to the RIC in the amount of 1,000 euros.
In both fiscal year 2021 and 2022 , company "B" has profits that are not subject to distribution of 1,000,000 euros.
In both fiscal year 2021 and 2022 , the reduction that company "B" may apply to its tax base will be limited to 90 percent of the portion of the profit obtained that is not subject to distribution:
Limit: 90% x 1,000,000 euros = €900,000.
Exercise 2021 :
Company "B" does not make any provision to the RIC in this fiscal year, so will not have to complete the row "Amount of the RIC provision charged to profits of 2021 " of the table "Special reserve regime for investments in the Canary Islands (Law 19/1994)" on page 22 of form 200.
Furthermore, will not have to complete box [00404] "Reserve for investments in the Canary Islands (Law 19/1994)" (negative adjustment) on page 13 of form 200, since the taxable base for fiscal year 2021 will not be reduced due to the allocation to the RIC.
The amount invested in advance in fiscal year 2021 is 1,000 euros, so it remains pending to provide the RIC with a charge to profits obtained in the three tax periods after 2021 for this amount. In this case, company "B" will have to complete the table relating to Advance investments , specifically the row Advance investments 2021 must be completed, the box corresponding to column "Investments planned letters B bis, C and D, art. 27.4 Law 19/1994" for an amount of 1,000 euros , as well as, in that same row, box "Pending provision for RIC at the end of period" for an amount of 1,000 euros . In addition, in fiscal year 2021 must report the materialization and its financing system together with the corporate income tax return.
In this way, the adjustment on page 13 and the table on page 22 of model 200 corresponding to fiscal year 2021 , will be completed as follows:
| Detail of the corrections to the P&L account result (page 13 of form 200) | ||||
|---|---|---|---|---|
|
Canary Islands investment reserve (Law 19/1994) |
[00403] |
--- |
[00404] |
0 |
Special reserve regime for investments in the Canary Islands (page 22 of form 200)
| Investments in advance | Pending to provide RIC at the beginning of the period | Planned investments letters A and B, art. 27.4 Law 19/1994 | Planned investments letters B bis, C and D, art. 27.4 Law 19/1994 | Pending provision RIC at end of period |
|---|---|---|---|---|
| Early Investments 2021 | --- | --- | 1,000 | 1,000 |
| Amount of the RIC allocation charged to profits of 2021 | |
|---|---|
| [00927] | 0 |
Exercise 2022 :
Company "B" makes a provision to the RIC for an amount of 1,000 euros from the profits of this year (it can do so because it meets the limit, since 1,000 euros < 900,000 euros), so must enter an amount of 1,000 euros in the row "Amount of the RIC provision charged to profits of 2022 " of the table "Special reserve regime for investments in the Canary Islands (Law 19/1994)" on page 22 of form 200.
In addition, must complete on page 13 of form 200, box [00404] "Reserve for investments in the Canary Islands (Law 19/1994)" (negative adjustment) for the amount of 1,000 euros , since it is the value of the reduction of the tax base for the year 2022 that is made due to the allocation to the RIC.
In fiscal year 2022 company "B" does not make any investment , but the investment made in ## 2021 ## will be considered materialized in this fiscal year 2022 . Therefore, said company must complete in the first box on page 22 of Form 200 relating to the Special Reserve Regime for Investments in the Canary Islands (Law 19/1994) column "Advanced investments considered materialization of the RIC in this liquidation", in the row corresponding to the RIC 2022 , for the amount that is considered to have materialized in 2022 because the RIC has been endowed, that is, 1,000 euros.
Company "B" must also complete the table relating to Advance Investments. At the beginning of fiscal year 2022 the RIC is pending provision for an amount of 1,000 euros, due to the advance investment made in fiscal year 2021 . For this reason, company "B" must complete column "Pending provision for RIC at the beginning of the period", in the row corresponding to RIC 2021 for an amount of 1,000 euros . The amount invested in 2021 was 1,000 euros and the allocation to the RIC in 2022 was 1,000 euros, so at the end of fiscal year 2022 there is no pending allocation to RIC for any amount. For this reason, company "B" should not complete the column "Pending provision of RIC at the end of the period", in the row corresponding to RIC 2021 .
In this way, the adjustment on page 13 and the table on page 22 of model 200 corresponding to the 2021 fiscal year will be completed as follows:
| Detail of the corrections to the P&L account result (page 13 of form 200) | ||||
|---|---|---|---|---|
| Canary Islands investment reserve (Law 19/1994) | [00403] | --- | [00404] | 1,000 |
Special reserve regime for investments in the Canary Islands (page 22 of form 200)
| RIC | Pending materialization RIC at the beginning of period | Applied / materialized in this settlement | Pending materialization RIC at the end of the period | ||||
|---|---|---|---|---|---|---|---|
| Planned investments letters A and B, art. 27.4 Law 19/1994 | Planned investments letters B bis, C and D, art. 27.4 Law 19/1994 | Early investments considered materialization of the RIC in this liquidation | |||||
| RIC 2021 | --- | --- | --- | --- | --- | ||
| RIC 2022 | --- | --- | --- | 1,000 | --- | ||
| Amount of the RIC allocation charged to 2021 profits | |
|---|---|
| [00927] | 1,000 |
| Investments in advance | Pending to provide RIC at the beginning of the period | Planned investments letters A and B, art. 27.4 Law 19/1994 | Planned investments letters B bis, C and D, art. 27.4 Law 19/1994 | Pending provision RIC at end of period |
|---|---|---|---|---|
| Early Investments 2021 | 1,000 | --- | --- | 0 |
| Early Investments 2022 | --- | --- | --- | --- |
Example 3
In the tax period beginning on January 1, 2020 , company "C", domiciled in the Canary Islands, acquires tangible fixed assets for 1,000 euros that contribute to improving the environment in the Canary Islands.
Company "C" makes a contribution to the RIC of 200 euros from the profits of fiscal year 2020 .
In fiscal year 2021 , company "C" does not make any investment in which the RIC can be materialized, although, from the profits of this fiscal year, said company makes a provision to the RIC in the amount of 600 euros.
In fiscal year 2022 , company "C" does not make any investment in which the RIC can be materialized, although, from the profits of this fiscal year, said company makes a provision to the RIC in the amount of 800 euros.
In both fiscal year 2020 and fiscal years 2021 and 2022 , company "C" has profits that are not subject to distribution of 1,000,000 euros.
In both fiscal year 2020 and fiscal years 2021 and 2022 , the reduction that company "C" may apply to its tax base will be limited to 90 percent of the portion of the profit obtained that is not subject to distribution:
Limit: 90% x 1,000,000 euros = €900,000.
Exercise 2020 :
Company "C" made a provision to the RIC for an amount of 200 euros from the profits of this year (it can do so because it meets the limit, since 200 euros < 900,000 euros), so must enter an amount of 200 euros in the row "Amount of the RIC provision charged to profits of 2020 " of the table "Special reserve regime for investments in the Canary Islands (Law 19/1994)" on page 22 of form 200.
In addition, must complete on page 13 of form 200, box [00404] "Reserve for investments in the Canary Islands (Law 19/1994)" (negative adjustment) for an amount 200 euros , since it is the value of the reduction of the tax base for the year 2020 that was made due to the allocation to the RIC.
In 2020 company "C" must complete in the first box on page 22 of Form 200 relating to the Special Reserve Regime for Investments in the Canary Islands (Law 19/1994) column "Early investments considered materialization of the RIC in this liquidation", in the row corresponding to the RIC 2020 , period in which the investment was made, for the amount that is considered materialized in 2020 because the RIC has been endowed, that is, 200 euros .
The amount invested in advance in fiscal year 2020 is 1,000 euros , as RIC has been provided in 2020 for an amount of 200 euros, it remains pending to provide RIC with a charge to the profits obtained in the three tax periods after 2020 for an amount of 800 euros. In this case, company "C" must complete the table relating to Early investments on page 22 of Form 200, specifically, it will have to complete box "Early investments 2020 " of column "Planned investments letters B bis, C and D, art. 27.4 Law 19/1994", for an amount of 1,000 euros , as well as column "Pending provision for RIC at the end of the period" in the row relating to "Early investments 2020 " for an amount of 800 euros . In addition, in fiscal year 2020 , must report the materialization and its financing system together with the Corporate Income Tax return.
In this way, the adjustment on page 13 and the table on page 22 of model 200 corresponding to fiscal year 2020 , will be completed as follows:
| Detail of the corrections to the P&L account result (page 13 of form 200) | ||||
|---|---|---|---|---|
|
Canary Islands investment reserve (Law 19/1994) |
[00403] |
--- |
[00404] |
200 |
| RIC | Pending materialization RIC at the beginning of period | Applied / materialized in this settlement | Pending materialization RIC at the end of the period | ||||
|---|---|---|---|---|---|---|---|
| Planned investments letters A and B, art. 27.4 Law 19/1994 | Planned investments letters B bis, C and D, art. 27.4 Law 19/1994 | Early investments considered materialization of the RIC in this liquidation | |||||
| RIC 2020 | --- | --- | --- | 200 | --- | ||
| Amount of the RIC allocation charged to profits of 2020 | |
|---|---|
| [00927] | 200 |
| Investments in advance | Pending to provide RIC at the beginning of the period | Planned investments letters A and B, art. 27.4 Law 19/1994 | Planned investments letters B bis, C and D, art. 27.4 Law 19/1994 | Pending provision RIC at end of period |
|---|---|---|---|---|
| Early Investments 2020 | --- | --- | 1,000 | 800 |
Exercise 2021 :
Company "C" makes a provision to the RIC for an amount of 600 euros from the profits of this year (it can do so because it meets the limit, since 600 euros < 900,000 euros), so must enter an amount of 600 euros in the row "Amount of the RIC provision charged to profits of 2021 " of the table "Special reserve regime for investments in the Canary Islands (Law 19/1994)" on page 22 of form 200.
In addition, must complete on page 13 of form 200, box [00404] "Reserve for investments in the Canary Islands (Law 19/1994)" (negative adjustment) for the amount of 600 euros , since it is the value of the reduction of the tax base for the year 2021 that was made due to the allocation to the RIC.
In fiscal year 2021 company "C" does not make any investment , but part of the investment made in 2020 ### ## will be considered materialized in this fiscal year 2021 ##5##. Therefore, said company must complete in the first box on page 22 of Form 200 relating to the Special Reserve Regime for Investments in the Canary Islands (Law 19/1994) column "Advanced investments considered materialization of the RIC in this liquidation", in the row corresponding to the RIC 2021 , for the amount that is considered to have materialized in 2021 because the RIC has been endowed, that is, 600 euros.
At the beginning of fiscal year 2021 the RIC is pending provision for an amount of 800 euros, due to the advance investment that was made in fiscal year 2020 . For this reason, company "C" must complete the column "Pending provision for RIC at the beginning of the period" in the table relating to Advance Investments, in the row corresponding to RIC 2020 for an amount of 800 euros . The amount invested in advance in fiscal year 2020 was 1,000 euros and the provision to the RIC in fiscal year 2020 was 200 euros, in 2021 it is 600 euros, so at the end of fiscal year 2020, RIC remains to be provided for an amount of 200 euros .
In this way, the adjustment on page 13 and the table on page 22 of model 200 corresponding to fiscal year 2021 , will be completed as follows:
| Detail of the corrections to the P&L account result (page 13 of form 200) | ||||
|---|---|---|---|---|
|
Canary Islands investment reserve (Law 19/1994) |
[00403] |
--- |
[00404] |
600 |
| RIC | Pending materialization RIC at the beginning of period | Applied / materialized in this settlement | Pending materialization RIC at the end of the period | ||||
|---|---|---|---|---|---|---|---|
| Planned investments letters A and B, art. 27.4 Law 19/1994 | Planned investments letters B bis, C and D, art. 27.4 Law 19/1994 | Early investments considered materialization of the RIC in this liquidation | |||||
| RIC 2020 | --- | --- | --- | --- | --- | ||
| RIC 2021 | --- | --- | --- | 600 | --- | ||
| Amount of the RIC allocation charged to profits of 2021 | |
|---|---|
| [00927] | 600 |
| Investments in advance | Pending to provide RIC at the beginning of the period | Planned investments letters A and B, art. 27.4 Law 19/1994 | Planned investments letters B bis, C and D, art. 27.4 Law 19/1994 | Pending provision RIC at end of period |
|---|---|---|---|---|
| Early Investments 2020 | 800 | --- | --- | 200 |
| Early Investments 2021 | --- | --- | --- | --- |
Exercise 2022 :
Company "C" will make a provision to the RIC for an amount of 800 euros from the profits of this year (it can do so because it meets the limit, since 800 euros < 900,000 euros), so must enter an amount of 800 euros in the row "Amount of the provision RIC charged to profits of 2022 " of the table "Special reserve regime for investments in the Canary Islands (Law 19/1994)" on page 22 of form 200.
In addition, must complete on page 13 of form 200, box [00404] "Reserve for investments in the Canary Islands (Law 19/1994)" (negative adjustment) for an amount 800 euros , since it is the value of the reduction of the tax base for the year 2022 that was made due to the allocation to the RIC.
In fiscal year 2022 company "C" does not make any investment , but part of the investment made in 2020 will be considered materialized in this fiscal year ##5##. Therefore, said company must complete in the first box on page 22 of Form 200 relating to the Special Reserve Regime for Investments in the Canary Islands (Law 19/1994) column "Advanced investments considered materialization of the RIC in this liquidation", in the row corresponding to the RIC 2022 , for the amount that is considered to have materialized in 2022 because the RIC has been endowed, that is, 200 euros.
Regarding the table relating to Advance investments , at the beginning of fiscal year 2022 it is pending to provide the RIC for an amount of 200 euros, due to the advance investment that was made in fiscal year 2020 . For this reason, company "C" must complete column "Pending provision for RIC at the beginning of the period" , in the row corresponding to RIC 2020 for an amount of 200 euros .
The amount invested in 2020 was 1,000 euros and the allocation to the RIC in 2020 was 200 euros, in 2021 600 euros and in 2022 800 euros, therefore, in the table relating to Early investments there is no pending allocation to RIC for any amount, at the end of fiscal year 2022 . For this reason, company "C" should not complete the box "Pending provision of RIC at the end of the period", in the row corresponding to RIC 2020 .
Although in the financial year 2022 , a total reserve of 800 euros will be provided , of which 200 euros correspond to the materialization of advance investments made in the financial year 2020 , therefore amount of 600 euros would remain pending to be materialized in subsequent periods. For this reason, company "C" must complete, in the first box on page 22 of Form 200, column "Pending RIC materialization at the end of the period", in the row corresponding to RIC 2022 for the amount of 600 euros .
| Detail of the corrections to the P&L account result (page 13 of form 200) | ||||
|---|---|---|---|---|
|
Canary Islands investment reserve (Law 19/1994) |
[00403] |
--- |
[00404] |
800 |
| RIC | Pending materialization RIC at the beginning of period | Applied / materialized in this settlement | Pending materialization RIC at the end of the period | ||||
|---|---|---|---|---|---|---|---|
| Planned investments letters A and B, art. 27.4 Law 19/1994 | Planned investments letters B bis, C and D, art. 27.4 Law 19/1994 | Early investments considered materialization of the RIC in this liquidation | |||||
| RIC 2020 | --- | --- | --- | --- | --- | ||
| RIC 2021 | --- | --- | --- | --- | --- | ||
| RIC 2022 | --- | --- | --- | 200 | 600 | ||
| Amount of RIC allocation charged to profits of 2022 | |
|---|---|
| [00927] | 800 |
| Investments in advance | Pending to provide RIC at the beginning of the period | Planned investments letters A and B, art. 27.4 Law 19/1994 | Planned investments letters B bis, C and D, art. 27.4 Law 19/1994 | Pending provision RIC at end of period |
|---|---|---|---|---|
| Early Investments 2020 | 200 | --- | --- | 0 |
| Early Investments 2021 | --- | --- | --- | --- |
| Early Investments 2022 | --- | --- | --- | --- |