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Practical Manual for Companies 2024.

c. Completion of the table “Special system of the reserve for investments in the Canary Islands (Law 19/1994)” (page 22 of form 200)

Entities that have applied the RIC In any tax period beginning between 2019 and 2024, they must complete this table as follows:

1. Paragraph «RIC»

  • In the column "Pending materialization" RIC at the beginning of the period» The amounts by which the tax base was reduced from 2019 to 2023 will be recorded, due to the reserve for investments in the Canary Islands that at the beginning of the period have not yet materialized in any of the investments referred to in letters A, B, B bis, C and D of article 27.4 of Law 19/1994.

  • Columns "Applied/materialized in this settlement" will be completed:

    • In the column "Planned investments, letters A and B, art. 27.4 Law 19/1994", the amount of those quantities by which the tax base of previous years was reduced from 2019 (accounting allocations in the following years), which have materialized in the tax period subject to declaration, in any of the investments provided for in letters A and B of article 27.4 of Law 19/1994, must be recorded.

    • In the column «Investments planned in letters B bis, C and D art. 27.4 Law 19/1994», The amount of those quantities by which the tax base of previous years was reduced from 2019 (accounting allocations in the following years) must be recorded, which have materialized, in the tax period subject to declaration, in any of the investments provided for in letters B bis, C and D of article 27.4 of Law 19/1994.

    • In column "Early investments considered materialization of the RIC in this settlement " the amount of those investments made in previous periods or in this same period that are considered early materialization of the RIC in this fiscal year must be recorded.

    • In the column «Integrated into BI for failure to comply with requirements» The amounts allocated in periods prior to the RIC that gave rise to the reduction of the tax base and that, as a result of non-compliance with any of the requirements established in article 27 of Law 19/1994, must be integrated into the tax base of the tax period subject to declaration will be recorded.

      Remember:

      In the tax period in which the non-compliance occurs, these amounts must be included in the box [00403] "Reserve for investments in the Canary Islands (Law 19/1994)" on page 13 of Form 200.

  • In column "Pending RIC materialization at the end of the period" the amount of the amounts that reduced the tax base and that remain pending materialization at the end of the period must be recorded. According to the provisions of article 27.4 of Law 19/1994, the amounts allocated to the RIC must be materialized within a maximum period of three years, counted from the date of accrual of the tax corresponding to the year in which it was provided.

  • In the box [00927] "RIC allocation amount charged to 2024 profits", the amount by which the tax base was reduced in the tax period being declared must be recorded due to the provision made to the reserve for investments in the Canary Islands (accounted for in the following year with a charge to the profits of said year), in accordance with the limit and other conditions established in article 27 of Law 19/1994.

    The amount entered in this box [00927] must match the negative adjustment in box [00404] "Reserve for investments in the Canary Islands (Law 19/1994)" on page 13 of form 200.

    Remember:

    Corporate Taxpayers who make the corresponding reduction to the reserve for investments in the Canary Islands , will be required to submit within the deadline established for submitting the Corporate Tax return, the informative declaration approved by Order HAP /296/2016, of March 2, which approves model 282 "Annual informative declaration of aid received within the framework of the Economic and Fiscal Regime of the Canary Islands and other state aid, derived from the application of European Union Law."

2. Paragraph «Early investments»

Note:

With effects for the tax periods beginning on or after January 1, 2024, Article 27.11 of Law 19/1994 has been amended by Royal Decree-Law 8/2023, of December 27, in order to eliminate the time limit, allowing allocations to be made from profits obtained within the period of validity of the Regulation (EU) Commission Regulation (EC) No 651/2014 of 17 June 2014 declaring certain categories of aid compatible with the internal market in application of Articles 107 and 108 of the Treaty, i.e. until December 31, 2026, or as long as the period of validity of the standard that replaces it is respected. 

Since the modification of article 27.11 of Law 19/1994 produces effects from January 1, 2024, and since The legislator has not introduced any transitional regime, the new wording given by Royal Decree-Law 8/2023, will be applicable with respect to the advance investments made from that date, so that said investments will be considered as materialization of the RIC provided that the latter is provided for from profits obtained within the period in which the investment is made or in the three subsequent periods, and provided that the period of validity of Commission Regulation (EU) No 651/2014 of 17 June 2014 declaring certain categories of aid compatible with the internal market in application of Articles 107 and 108 of the Treaty is respected, i.e. until December 31, 2026, or as long as the period of validity of the standard that replaces it is respected. 

However, in the case of early investments made prior to January 1, 2024, such investments will be considered as materialization of the RIC provided that the latter is provided with profits obtained within the period in which the investment is carried out or in the three subsequent ones, and provided that the aforementioned provisions are made with profits obtained up to the December 31, 2023.

Therefore, effective for tax periods beginning on or after January 1, 2024, early investments made in fiscal years 2021, 2022, and 2023 cannot be considered as a result of the RIC, as its deadline remains December 31, 2023.

Given the new wording of article 27.11 of Law 19/1994, in force with effect for tax periods commencing on or after 1 January 2024, according to which early investments made in the years 2021, 2022 and 2023 may not be considered as the materialisation of the RIC for periods from 2024 onwards, since its deadline remains 31 December 2023, the "Early Investments" section of the table "Special regime for the reserve for investments in the Canary Islands (Law 19/1994)" on page 22 of form 200 must be completed as follows:

  • The column "RIC provision pending at the beginning of the period"Advance investments of future provisions to the RIC that were made in the 2020 financial year, for which the RIC had not yet been provided for at the beginning of the period, will be recorded and will be charged to the profit of subsequent financial years. For tax periods beginning on or after January 1, 2024, lThe early investments made in the years 2021, 2022 and 2023 cannot be considered as materialization of the RIC, since the deadline for making the provisions charged to the profits of said investments remains the December 31, 2023, so the boxes corresponding to these investments will remain closed.

  • In the column "Planned investments, letters A and B, art. 27.4 Law 19/1994", the amount of the anticipated investments made in the 2024 financial year pending future allocations to the reserve for investments in the Canary Islands will be recorded (even if the latter are charged to the profits of the 2024 financial year). An early investment is one made prior to obtaining the profit from which the RIC will be allocated, regardless of whether the first allocation of the RIC is made from profits from the year in which it was invested or whether the allocation for that year covers or does not cover the total amount of the early investment. This box will record any investments made during 2024 in any of the investments referred to in letters A and B of Article 27.4 of Law 19/1994.

  • In the column "Planned investments letters B bis, C and D art. 27.4 Law 19/1994", the amount of the anticipated investments made in the 2024 financial year pending future allocations to the reserve for investments in the Canary Islands must be recorded (even if the latter are charged to the profits of the 2024 financial year). An early investment is one made prior to obtaining the profit from which the RIC will be allocated, regardless of whether the first allocation of the RIC is made from profits from the year in which it was invested or whether the allocation for that year covers or does not cover the total amount of the early investment. This box will record any investments made during 2024 in any of the investments referred to in letters B bis, C and D of Article 27.4 of Law 19/1994.

  • In the column "RIC funding pending at the end of the period" The amount of anticipated investments of future provisions to the RIC that have been made and that, at the end of the period, are still pending to be provided to the RIC from the profit of subsequent years must be recorded. For tax periods starting on or after January 1, 2024, the amount pending allocation will be recorded against the profit of subsequent years corresponding to the anticipated investment made in the year 2024, taking into account that these allocations must be made against profits.until December 31, 2026. On the contrary, with effect for the same period, the boxes corresponding to the anticipated investments made in the years 2021, 2022 and 2023 and pending allocation in the year 2024 will remain closed, since the aforementioned allocations can only be made from profits obtained up to the end of the period. December 31, 2023.

    Remember:

    In the tax period in which the advance investments are made, the materialization and its financing system must be communicated together with the Corporate Tax return (see point 1d) of the section "Documentation to be submitted before the declaration» of Chapter 1 of this Practical Manual).