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Practical Manual of Companies 2022.

Taxpayer who participates in the financing of film productions and live shows

With effects for tax periods starting on January 1, 2021, the fifth Final Provision of Law 38/2022, of December 27, introduces article 39.7 of the LIS in in relation to the deductions provided for in sections 1 and 3 of article 36 of the LIS that can be applied by the taxpayer who participates in the financing of productions of Spanish feature films and short films and audiovisual series of fiction, animation, documentaries or production and exhibition of live performances of performing and musical arts, the following modifications :

  • The taxpayer who participates in the financing may apply these deductions when contributing amounts intended to finance all or part of the production costs , as well as the expenses for the obtaining of copies, advertising and promotion by the producer up to the limit of 30 percent of the production costs, provided that does not acquire intellectual or other property rights regarding the results of the productions or shows, whose property must in all cases belong to the producer.

    The amounts to finance production costs may be contributed in any phase of production , before or after the moment in which the producer incurs the aforementioned production costs, and until obtaining of the nationality certificates and the certificate that accredits the cultural character in relation to its content, as well as the one obtained by the National Institute of Performing Arts and Music, as the case may be. The amounts to finance the expenses for obtaining copies, advertising and promotion by the producer referred to in the previous section may be contributed prior or after the moment in which the producer incurs the aforementioned expenses, but never after the tax period in which the producer incurs them.

  • The taxpayer who participates in the financing will determine the amount of the deductions provided for in sections 1 and 3 of article 36 of the LIS under the same conditions that would have been applied to the producer, as long as they have been generated for the latter. The maximum amount of the deduction generated by the producer that the taxpayer who participates in the financing may apply will be the result of multiplying by 1.20 the amount of the amounts that the latter has contributed to finance the aforementioned production costs or the expenses for obtaining copies, advertising and promotion at the expense of the producer. The excess deduction may be applied by the producer who generated the right to it.

  • Regarding the obligation to sign a financing contract, both the producer and the taxpayers participating in the financing are allowed to sign one or more financing contracts, which may be signed in any phase of production . In addition, the details that the financing contracts must contain are modified, adding the identity of the taxpayers who participate in the financing and the budget and the form of financing the expenses for obtaining copies, advertising and promotion at the expense of the producer.

  • In relation to the communication to the Tax Administration that must be made by the taxpayer participating in the financing, it is established that this must be signed by both the producer and by the taxpayer who participates in the financing, prior to the end of the tax period in which the latter has the right to apply the deduction.

  • It is established that the taxpayer who participates in the financing will not be able to apply the deductions referred to in the previous paragraphs when he is linked , in the terms established by the article 18 of the LIS, with the taxpayer who generates the right to apply said deductions.

  • It is added that the amount of the deduction applied by the taxpayer who participates in the financing must be taken into account for the purposes of applying the joint limit of 25 percent established in article 39.1 of the LIS. Said limit will be raised to 50 percent when the amount of the deduction provided for in sections 1 and 3 of article 36 of the LIS, which corresponds to the taxpayer participating in the financing, is equal or greater than 25 percent of its full quota reduced by deductions to avoid international double taxation and bonuses.