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Practical Manual for Companies 2024.

Amount of deduction

Regulation: Article 20 Law 49/2002

Note:

As a result of the amendment to Article 20 of Law 49/2002 of December 23, in the case of a donation made in a tax period with a start date prior to January 1, 2024, a distinction can be made between:

  • For the basic part of the deduction that did not exceed 10 percent of the tax base of the generation period, the corresponding deduction must be determined according to the percentage and limits applicable in the aforementioned generation period. This deduction was applied or not in this period depending on the net tax rate for the period, with the excess over the net tax rate being applicable in the 10 immediate and successive tax periods.

  • For the basic part of the deduction that exceeded 10 percent of the tax base of the generation periodn, the corresponding deduction applicable in a tax period starting on or after 1 January 2024 will be calculated by applying the new deduction rates in force (40 or 50 percent in the case of repetition) and the new limit of 15 percent on the tax base of the period.

For a better understanding of the calculation of the amount to be applied for these deductions, you can refer to Example 2 of the following paragraph.

a. Applicable percentages 

Taxpayers will have the right to deduct from the full amount, reduced by the deductions and bonuses provided for in Chapters II, III and IV of Title VI of the LIS, he 40 percent from the basis of the deduction.

The amounts corresponding to the tax period not deducted may be applied in the settlements of the tax periods that conclude in the 10 immediate and successive years .

With effect for tax periods beginning on or after January 1, 2024, sand in the two immediately preceding tax periods donations, gifts or contributions with the right to deduction have been made in favor of the same entity, the amount of the donation, gift or contribution being of this tax period and that of the previous tax period, for an amount equal to or greater than, in each of them, that of the immediately preceding tax period, the percentage of deduction applicable to the base of the deduction in favor of that same entity will be 50 percent.

Keep in mind:

For tax periods beginning on or after January 1, 2024, the number of exercises is reduced from four to three yearsduring which the donor or contributor must make donations to the same entity for an amount equal to or greater than that of the immediately preceding year, in order to access the 10-point increase in the deduction percentage, percentage that rises from 40 to 50 percent.

He Article 22 of Law 49/2002 It establishes that the General State Budget Law may establish a list of priority patronage activities and beneficiary entities. In relation to these activities and beneficiary entities, the General State Budget Law may increase by five percentage points, at most, the percentages and limits of the deduction for donations established in article 20 of Law 49/2002. For these purposes, the percentage of 40 percent applicable to this deduction will be able to rise to the 45 percent and the percentage increased from 45 percent to 50 percent. In addition, the maximum limit of 15 percent of the impossible base of the tax period will rise to 20 percent.

b. Limit of the deduction base

The basis of this deduction may not exceed 15 percent of the tax base of the tax period.

Amounts exceeding this limit may be applied in tax periods ending the 10 immediate and successive years.