Practical example of deductions

Company "A", which has a net turnover of less than 20 million euros and is not taxed under the tax consolidation regime and whose financial year lasts twelve months and coincides with the calendar year, has the following data when filing its Corporate Income Tax return for the 2023 financial year:

1. The total amount, less double taxation deductions and bonuses (box [00582] "Positive adjusted total amount" on page 14 of form 200), is 100,000 euros.

2. The following deductions from previous periods are pending application:

   • Exercise 2015: For investment of profits: 20,000 euros.

   • Exercise 2016: For research and development expenses: 2,000 euros.

   • Fiscal year 2017 For donations to UNICEF : 1,000 euros.

   • Exercise 2018: For job creation for workers with disabilities: 3,300 euros.

   • Exercise 2019: For his participation in the VII Centenary of the Archive of the Crown of Aragon: 1,800 euros.

   • Exercise 2020: For expenses in technological innovation: 2,500 euros.

3. During the 2023 financial year, investments have been made in the Canary Islands through the acquisition of tangible fixed assets which, in accordance with the provisions of Law 20/1991, entitle the company to a deduction of 2,000 euros.

4. The amount of the deduction for research and development activities corresponding to expenses and investments made in the 2023 financial year amounts to 21,000 euros (it exceeds 10 percent of the full tax rate for 2023 reduced by deductions to avoid double taxation and bonuses). In fiscal year 2023, no investments will be made in technological innovation.

Solution:

Positive adjusted gross share (box [00582]): 100,000 euros

Application of deductions:

• For investment of profits 2015 (pending balance): 20,000

  Applies: 20,000

• For research and development expenses 2016 (pending balance): 2,000

  It applies ⁽¹⁾: 2,000

• For donations to UNICEF 2017 (pending balance): 1,000

  Applies: 1,000

• For job creation for workers with disabilities 2018 (outstanding balance): 3.300

  It applies ⁽¹⁾: 3.300

• For their participation in the VII Centenary of the Archive of the Crown of Aragon 2019 (pending balance): 1,800

  It applies ⁽¹⁾: 1,800

• For technological innovation expenses 2020 (pending balance): 2,500

  It applies ⁽¹⁾: 2,500

• For investments made in the Canary Islands andn 2023: 2,000

  It applies ⁽²⁾: 2,000

• For research and development expenses 2023 : 21,000

  It applies ^{(1) (3)}: 19.400

Net share calculation :

Total amount, less deductions for double taxation and bonuses = 100,000 euros

(-) Deductions applied = 52,000 euros

Net share (box [00592]) = 48,000 euros

Notes to the example:

⁽¹⁾ The joint limit of deductions in Chapter IV of Title VI of the LIS amounts to 50,000 euros. In accordance with the provisions of article 39 of the LIS it is raised from 25 to 50 percent on the positive adjusted integral quota, as the amount of the deduction for research and development activities and technological innovation exceeds 10 percent of said amount. ^{(back to research 2015) (return creation) (return participation) (return innovation) (back to research 2020)}

⁽²⁾ The applicable limit according to Law 20/1991 amounts to 50 percent of the adjusted total positive quota (50,000 euros). ^(Back)

⁽³⁾ This deduction cannot be applied in its entirety because it exceeds the aforementioned joint limit. ^(Back)

Completion of the tax return for the year 2023> (tables pages 16 bis, 17, 18 and 18 bis of form 200)

Investment deductions in the Canary Islands with increased limits

Total	[00886]	2,000	[00590]	2,000	[00887]	0
Deductions	Pending deduction generated		Applied in this settlement		Pending application in future years
2023: Investments in the Canary Islands (Law 20/1991)	[01802]	2,000	[01803]	2,000	[01804]	0

Deductions to encourage certain activities
( Cap. IV Title VI, DT 24.3 LIS and art. 27.3 first Law 49/2002)

Total	[00831]	51,600	[00588]	50,000	[00832]	1,600
Deductions	Pending deduction generated		Applied in this liquidation		Pending application in future years
2015: Sum deductions Chap. IV Title. VI Law 43/95, RDLeg. 4/2004 and LIS (except R&D&I)	[00813]	20,000	[00814]	20,000	[00815]	0
2016 : Research and Development (RTD)	[01617]	2,000	[01618]	2,000	[01619]	0
2017 : Sum deductions Chap. IV Title. VI Law 43/95, RDLeg. 4/2004 and LIS (except R&D&I)	[01847]	1,000	[01848]	1,000	[01849]	0
2018 : Sum deductions Chap. IV Title. VI Law 43/95, RDLeg. 4/2004 and LIS	[02218]	3.300	[02219]	3.300	[02220]	0
2019 : Sum deductions Chap. IV Title. VI Law 43/95, RDLeg. 4/2004 and LIS (except R&D&I)	[02353]	1,800	[02354]	1,800	[02355]	0
2020 : Technological innovation (IT)	[00234]	2,500	[00235]	2,500	[00236]	0
2023: Research and development (RT)	[00798]	21,000	[00799]	19.400	[00800]	1,600