Deduction for investments in cinematographic productions, audiovisual series and live performances of scenic and musical arts

Article 36 of the LIS regulates a deduction for investments in film productions, audiovisual series and live shows.Section 1 sets out limits on the percentages of deduction for investments in Spanish productions of feature films and fiction, animation or documentary audiovisual series.The amount of this deduction, together with other aid received by the taxpayer, may not exceed 50 percent of the cost of production, subject to certain exceptions.However, it is stipulated that this limit will be raised to 60% in the case of cross-border productions financed by more than one EU Member State and involving producers from more than one Member State, so that from 1 January 2021, co-productions involving only UK production companies will not benefit from the increased limit.

Likewise, and in this regard, Article 5 of Law 55/2007 of 28 December 2007 on Cinema (BOE of 29 December) sets out the requirements for a production to be considered Spanish, which requires that at least 75 percent of the cast of authors, actors or creative technical personnel of cinematographic and audiovisual works be made up of persons with Spanish nationality or nationals of any of the other EU Member States, of the EEA, or who hold a valid residence card or authorisation in Spain or any of those States.

From 1 January 2021, authors, actors or technical creative personnel with British nationality or residence will not count for the application of the above percentage.

Article 36.2 of the LIS establishes that producers who undertake the execution of a foreign production in Spain are entitled to a deduction of 30 percent on the first million of the basic deduction and 25 per cent on the excess of this amount for expenses incurred in Spanish territory within certain limits.These expenses correspond, among others, to those of creative personnel, provided that they are resident for tax purposes in Spain or in an EEA Member State, with a limit.

Thus, from 1 January 2021 creative personnel resident for tax purposes in the UK will not be entitled to the above deduction for expenses incurred by the Spanish production entity.