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Practical Manual for Companies 2023.

Common rules on deductions to encourage certain activities

Regulation: Article 39 LIS .

The following common provisions are established for the deductions provided for in Chapter IV of Title VI of the LIS:

  • These deductions will be applied once the deductions and bonuses of Chapters II and III of Title VI of the LIS have been made.

    Keep in mind:

    When applying the deductions for investments of the year established in the Corporate Tax Law, and the outstanding balances of deductions regulated both in previous Corporate Tax laws, as well as in the different General State Budget Laws or in laws that establish specific regimes, the order established in section 1 of the twenty-fourth transitional provision of the LIS or in article 39.1 thereof must be taken into account.

    Deductions for investments will be applied once the deductions and bonuses of Chapters II and III of Title VI of the LIS have been applied, as well as the deductions to avoid double taxation pending application, which could be regulated in laws regulating Corporate Tax prior to the LIS.

  • The amounts corresponding to the tax period not deducted may be applied in the settlements of the tax periods that conclude in the 15 immediate and successive years .

    However, the amounts corresponding to the deduction for research and development activities and technological innovation provided for in article 35 of the LIS, may be applied in the liquidations of the tax periods that conclude in the 18 immediate and successive years .

    Keep in mind:

    The provisions of this point will also apply to deductions under the regime of article 27.3 First of Law 49/2002, generated in 2023 and which have not been deducted in this declaration.

  • The calculation of the periods for the application of deductions may be deferred until the first fiscal year in which, within the limitation period, positive results are produced, in the following cases.

    • In newly created entities.

    • In entities that offset losses from previous years by effectively providing new resources, without considering the application or capitalization of reserves as such.

  • The amount of the deductions provided for in Chapter IV of Title VI of the LIS, applied in the tax period, may not jointly exceed 25 percent of the total quota reduced by the deductions to avoid double taxation and the bonuses. However, the limit will be raised to 50 percent when the amount of the deductions provided for in articles 35 and 36 of the LIS, which correspond to expenses and investments made in the tax period itself, exceeds 10 percent of the total quota, reduced by the deductions to avoid international double taxation and the bonuses.

    Keep in mind:

    This joint limit will apply to all deductions listed in the table "Deductions to encourage certain activities ( Chap. IV. Title VI, DT 24.3 LIS and art. 27.3 first Law 49/2002)» of pages 17, 18 and 18 bis of model 200.

    The amount of the deduction applied by the taxpayer who participates in the financing of Spanish productions of feature films, short films, audiovisual series of fiction, animation or documentaries, or in the production and exhibition of live shows of performing arts and music made by other taxpayers, must be taken into account for the purposes of applying the joint limit of 25 percent established in the first paragraph of this point. However, 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 who participates in the financing, is equal to or greater than 25 percent of its full share reduced by deductions to avoid international double taxation and bonuses.

  • The same investment may not give rise to the application of more than one deduction in the same entity unless expressly provided, nor may it give rise to the application of a deduction in more than one entity.

  • The assets affected by the deductions provided for in this chapter to which this section refers, must remain in operation for 5 years, or 3 years , if they are movable assets, or during their useful life if it is less.

    In the case of film productions and audiovisual series , this requirement will be deemed to be met to the extent that the producer maintains the same percentage of ownership of the work for the period of 3 years , without prejudice to its right to market all or part of the exploitation rights derived therefrom to one or more third parties.

    The deducted amount, in addition to late payment interest, will be paid together with the corresponding fee for the tax period in which non-compliance with this requirement is manifested.

  • The right of the Administration to initiate the verification procedure of the deductions provided for in this Chapter applied or pending application will expire after 10 years counting from the day following the end of the period established for submitting the declaration or self-assessment corresponding to the tax period in which the right to its application was generated.

    After this period, the taxpayer must prove the deductions that he intends to apply by showing the liquidation or self-assessment and the accounting, with proof of their deposit during the aforementioned period in the Commercial Registry.