Deduction for research and development activities

Regulation: Articles 35.1 LIS and 94 Law 20/1991

To apply the deduction for research and development activities carried out in the Canary Islands, entities must meet the general requirements established for these deductions in article 35.1 of the LIS .

a. Percentages

On the percentages established in article 35.1 of the LIS for research and development expenses, the increased percentages of article 94.1.a) of Law 20/1991 will be applied. The reason is that the deduction for research and development activities continues to apply in the Canary Islands in accordance with the Deduction Regime in force at the time of the repeal of article 26 of Law 61/1978 and with the specialities introduced by article 94 of Law 20/1991.

For these purposes, the 45 percent will be applied to the research and development expenses incurred in the year and the 75.6 percent will be applied to the excess expenses with respect to the average of those incurred in the two previous years. Likewise, 28 percent of investments in tangible and intangible fixed assets, excluding real estate and land, are deductible, provided they are exclusively used for research and development activities. Finally, there is an additional deduction of percent applicable to personnel costs qualified researchers assigned exclusively to research and development activities.

b. Limits

In the same way that the percentages are increased, the limits applicable to this deduction be increased in accordance with the provisions of article b) of Law 20/1991, therefore it will be subject to the joint limit of 60/90 or 70/100 (La Palma, La Gomera and El Hierro) percent.

In the event that the taxpayer exercises the option provided for in article 39.2 of the LIS , these deductions will not be subject to the joint limit of 60/90 or 70/100 (La Palma, La Gomera and El Hierro) percent established in article 94.1 b) of the LIS.