Deductions for foreign film productions (art. 36.2 LIS)

a. Scope

They have the right to apply this deduction for expenses made in Spanish territory, the producers registered in the Registry Administration of Cinematographic Companies of the Institute of Cinematography and Audiovisual Arts that are in charge of the execution of a foreign production of cinematographic feature films or audiovisual works that allow the preparation of a physical support prior to serial industrial production.

b. Requirements

With effect for tax periods beginning on or after January 1, 2021, in order to apply this deduction, the following requirements must be met:

1. That the production obtains the corresponding certificate that accredits the cultural character in relation to its content or its connection with the Spanish or European cultural reality, issued by the Institute of Cinematography and of Audiovisual Arts , or by the corresponding body of the Autonomous Community with jurisdiction in the matter. This requirement will not be required to apply the deduction to the producer who is in charge of the execution of visual effects services.

2. That a specific reference to having taken advantage of the tax incentive be incorporated into the final credits titles of the production; the collaboration, where appropriate, of the Government of Spain, the Autonomous Communities, the Film Commissions or the Film Offices that have directly intervened in the filming or other production processes developed in Spain, as well as, where appropriate, the specific filming locations in Spain and, in the case of animated audiovisual works, the place where the studio that has been entrusted with the production service is located.

3. That the rights holders authorize the use of the title of the work and of graphic and audiovisual press material that expressly includes the specific locations of the filming or any other production process carried out in Spain, for the carrying out of activities and the preparation of promotional materials in Spain and abroad for cultural or tourist purposes, which may be carried out by state, regional or local entities with powers in matters of culture, tourism and economy, as well as as well as by the Film Commissions or Film Offices that have intervened in the filming or production.

c. Deduction base

The basis of the deduction is constituted by the following expenses incurred in Spanish territory directly related to production:

1. The expenses of creative personnel , as long as they have tax residence in Spain or in a Member State of the European Economic Area.

2. The expenses derived from the use of technical industries and other suppliers .

d. Deduction amount

The amount of the deduction will be the result of applying the following percentages to the base of the deduction:

1. With general nature , the 30 percent with respect to the first million of the deduction base and the 25 percent on the excess of said amount.

   The deduction will be applied whenever the expenses incurred in Spanish territory are at least 1 million euros. In the case of animation productions, such expenses will be at least 200,000 euros.

   For tax periods beginning on or after January 1, 2023, the maximum amount of this deduction is 20 million euros for each production carried out (previously, the maximum amount was 10 million euros).

   In the case of audiovisual series , the maximum amount of deduction will be 10 million for each episode produced.

   The amount of this deduction, together with the rest of the aid received by the contributing company, may not exceed 50 percent of the production cost.

2. In cases where the producer is responsible for the execution of visual effects services and the expenses carried out in Spanish territory are less than 1 million euros, the 30 percent will apply of the basis of the deduction.

   The amount of this deduction may not exceed the amount established by Commission Regulation ( EU ) 1407/2013, of December 18, 2013, relating to the application of articles 107 and 108 of the Treaty on the Functioning of the European Union to minimis aid.

This deduction is excluded from the joint limits of 25 and 50 percent referred to in the last paragraph of article 39.1 of the LIS , therefore so said deduction will not be computed for the purposes of calculating said limit.

e. Filling in form 200

In application of the provisions of article 36.2 of the LIS , taxpayers must enter in box [01039] «Deductions for foreign film productions ( art. 36.2 LIS)» on page 14 bis of model 200, the amount of the deduction for foreign film productions that apply in the tax period being declared. The amount entered in this box will be the result of completing the breakdown table on page 18 bis of form 200 explained below.

Completion of the table “Deductions for foreign film productions (art. 36.2 LIS)” (page 18 bis of model 200)

Taxpayers who apply the deduction for foreign film productions regulated in article 36.2 of the LIS must complete this breakdown table as detailed below:

• In column "Deduction pending/generated" , the amounts of the deduction generated in both the current tax period (2023) and in one prior to the current one (2015 to 2015) will be entered in the corresponding boxes. 2023), and which are pending application at the beginning of the tax period that is the subject of declaration.

• In column "Applied in this settlement" the part (or all, where appropriate) of the amounts entered in the previous column "Deduction generated" relating to the deduction for film productions will be collected. foreign, which are applied in the settlement corresponding to the period under settlement

  Keep in mind:

  In box box [01039] the total of the amounts entered in the column "Applied in this settlement" will be collected and must be transferred to box [01039] on page 14 bis of form 200 regarding the settlement of the Tax.

• In column "Amount paid due to insufficient quota" will include the part of the amounts entered in the previous column "Applied in this settlement" on which, due to insufficient quota, the taxpayer requests its payment to the Tax Administration in the terms established in article 39.3 of the LIS.

  In the event that due to insufficient quota in the application of this deduction, its payment is requested to the Tax Administration in the terms provided in the article 39.3 of the LIS, said request must be made following the procedure detailed in the section “Payment of deductions for foreign film productions (art. 39.3 LIS)” of this Chapter 6 .

  Keep in mind:

  In box box [01892] the total of the amounts entered in the column "Amount paid due to insufficient quota" will be collected and must be transferred to box [01892] on page 14 bis of the model 200.

• In column "Pending application in future periods" the positive difference between the amount of deductions pending at the beginning of the tax period or generated in said period in the column "Deduction pending/ generated", and the amounts included in the columns "Applied in this settlement" and "Amount paid due to insufficient quota". This amount will remain pending application in future tax periods, unless the tax period being declared is the last in which the corresponding deduction can be applied, in which case the balance pending deduction would be lost.

Completion of the table “Investments in cinematographic productions or audiovisual series” (page 21 of model 200)

In addition to the breakdown table on page 18 bis of model 200, producers who have the right to practice the deduction for foreign film productions regulated in article 36.2 of the LIS must complete the "General regime" section of this box as detailed below:

• Cinematographic productions (except audiovisual series)

  Producers must enter in this box the number of productions that have generated the right to apply the deduction for foreign film productions in the tax period that is the subject of the declaration.

• Audiovisual series

  In the case of audiovisual series, the deduction is determined per episode, so producers must enter in the boxes created for this purpose, the number of series and episodes that generate the right to practice this deduction in the tax period object of the declaration.

  When completing box "number of episodes" it must be taken into account that the maximum deduction limit per episode provided for in article 36.2 of the LIS must be examined and met in each episode, to the extent that the limit of the deduction must be determined per episode, without the aforementioned limit being offset between episodes.