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Practical Manual for Companies 2023.

Deduction for investments in the Canary Islands

Entities with tax domicile in the Canary Islands are entitled to apply a series of deductions for investments made and remaining in the Canary Islands, for which article of Law 20/1991, of June , modifying the fiscal aspects of the Economic Fiscal Regime of the Canary Islands establishes in the Corporate Tax the particularity consisting of the application of percentages and deduction limits higher than those established in the general deduction regime:

  • applicable on investments made will be 80 percent higher than those of the general regime, with a minimum differential of 20 percentage points.

  • The deduction for investment in the Canary Islands will have as a maximum limit the percentage indicated below of the net quota resulting from reducing the full quota by the amount of the deductions for double taxation and, where applicable, the bonuses provided for in article 25 of Law 61/1978, of December 27, on Corporate Tax (currently, articles 33 and 34 of the LIS ). This percentage will always be 80 percent higher than that set for each modification of the deduction for investments in the general regime, with a minimum differential of 35 percentage points. Therefore, the deduction limit is set at 60 percent of the net tax rate for the tax period, which is raised to 90 percent when the amount of deductions for research and development and technological innovation activities and for investments in film productions, audiovisual series and live performing arts and musical shows, which corresponds to expenses and investments made in the tax period itself, exceeds 10 percent of said net tax rate.

Note:

With effect for tax periods beginning on or after 7 November 2018 , for the islands of La Palma, La Gomera and El Hierro the joint limits of 60% and 90% are raised , respectively, to 70% and 100% , provided that Community state aid regulations permit it and the investments are covered by Law 2/2016, of 27 September, and other laws on measures to regulate the economic activity of these islands.

Entities that are entitled to apply deductions for investments made in the Canary Islands will record their amount in box [00590] "Canary Islands Investment Deductions" on page 14 bis of form 200. The amount entered in this box will be the result of completing the breakdown table "Deductions for investment in the Canary Islands with increased limits" on page 16 bis of form 200.

You can consult the types of deductions for investments in the Canary Islands and their particularities in Chapter 12 of this Practical Manual.