How to file a return for previous years

Article 7 of Royal Decree-Law 23/2020, of 23 June, in the drafting given by Final Provision eight of Royal Decree-Law 34 / 2020, of 17 November, with effect for the tax periods beginning in the years 2020 and 2021, establishes that the percentage of deduction referred to in Article 35,2 (c) of the Corporation Tax Act (LIS) will be increased in 38 percentage points for expenditure on projects started from 25 June 2020 consisting of technological innovation activities whose result this is a technological advance in obtaining new production processes in the automotive industry's value chain or substantial improvements to existing ones. This deduction is thus increased depending on the type of taxpayer among those taxpayers who are considered small and medium-sized enterprises in accordance with the provisions of Annex I to Commission Regulation (EU) No 651/2014 of 17 June 2014, and those that do not. For taxpayers who do not have this consideration, the expected increase will be 3 percentage points.

Final Provision four of Royal Decree-Law 23/2020 of 23 June introduced the sixteenth Additional Provision in the Spanish Corporation Tax Act, which includes a new case of freedom of amortisation in investments made in the value chain of electricity, sustainable or connected mobility. In this regard, the Sixth Additional Provision in the Spanish Corporation Tax Act, as drafted by Royal Decree-Law 34/2020, includes the tax incentive for freedom of amortisation in investments made in the electricity, sustainable or connected mobility value chain for investments made in the periods tax returns that will be completed between 2 April 2020 and 30 June 2021. Thus, investments in new tangible fixed assets that involve the sensorisation and monitoring of the production chain can be freely amortised , as well as the implementation of manufacturing systems based on modular platforms or that reduce the environmental impact, which are used by the automotive industry, at the disposal of the taxpayer and which enter into operation between 2 April 2020 and 30 June 2021, provided that, during the 24 months following the start date of the tax period in which the purchased items enter into operation, the average total workforce of the company will be maintained with respect to the average workforce for 2019. It should be taken into account that the maximum amount of the investment that can benefit from the freedom of amortisation regime will be 500,000 euros.

In addition, to apply this freedom of amortisation, taxpayers must provide a reasoned report issued by the Ministry of Industry, Trade and Tourism to rate the taxpayer's investment as suitable. This report will be binding on the Tax Administration.

This new case of freedom of amortisation regulated in the sixteenth Additional Provision of the Spanish Corporation Tax Act is incompatible with the assumption of freedom of amortisation established in article 102 of the Spanish Corporation Tax Act for small companies, so these companies will have to choose to apply one of the two tax incentives.

With effect for the tax periods beginning from 1 January 2020 and not ending on 11 March 2021, Royal Decree-Law 4/2021, of 9 March, amending Act 27/2014, of 27 November, on Corporation Tax, and the revised text of the Non-Residents'Income Tax Act, approved by Royal Legislative Decree 5/2004, of 5 March, in relation to hybrid asymmetries, introduces a new article in the LIS 15 , with the consequent repeal of Article 15 j) of the IS, and adds paragraphs 6 and 7 to Article 18 of the Text consolidated from the Non-Residents Income Tax Act, in order to transpose Directive (EU) 2016/1164 of Council of 12 July 2016, in the wording of Council Directive (EU) 2017/952 of 29 may 2017, with regard to the hybrid asymmetries that take place between Spain and other Member States and between Spain and third countries or territories.

In general, with the introduction of this new article, article of the Spanish Corporation Tax Act, it is a question of neutralizing the tax effects generated by the 15 hybrid asymmetries generated between a Corporation Tax taxpayer located in Spanish territory and a related entity established in another Member State or in a third country country or territory, when they carry out transactions that have a different tax rating in Spain and in that other country.

Article 65.Uno of Act 11/2020, of 30 December, on General State Budgets for 2021, with effect for tax periods beginning from 1 January 2021 that have not yet been completed at the entry into force of this law ( 01-01-2021) and indefinite term, it modifies the regulation in article 16,1 of the Spanish Corporation Tax Act on the limitation on deductibility of financial expenses, establishing that the addition of the financial income from investments in instruments will not be taken into account for the determination of the operational profit of assets that correspond to dividends, when the acquisition value of these investments is greater than 20 million euros, without reaching the percentage of 5% referred to in Articles 21,1 (a) and 32,1 (a) of the Spanish Corporation Tax Act.

Furthermore, due to the incorporation into the Spanish Corporation Tax Act of article (with the consequent repeal of Article 15 j) of the 15 LIS) carried out by Royal Decree-Law 4/2021, of 9 March, in order to transpose Directive (EU) 2016 / 1164 of the Council, of 12 July 2016, in the wording given by Council Directive (EU) 2017/952, of 29 May 2017, with regard to the hybrid asymmetries that take place between Spain and other Member States and between Spain and third countries or territories, article 16,1 of the Spanish Corporation Tax Act is modified in this Royal Decree-Law, to establish that the transfer made to the expenses referred to in the repealed article 15 j) of the Spanish Corporation Tax Act, must be incurred for tax periods beginning at from 1 January 2020 and which have not yet been completed at the entry into force of this Royal Decree-Law (11 March 2021), to non-deductible expenses under article of the Spanish Corporation Tax Act. 15

Act 11/2021, of 9 July, on measures to prevent and combat tax fraud, amends the tax regulations to be released, in order to transpose Council Directive (EU) 2016/1164 of 12 July 2016, which it states that this tax is used to guarantee that, when a taxpayer transfers his/her assets or tax residence outside the tax jurisdiction of the State, this State must tax the economic value of any capital gains created in its territory, even if this capital gain has not yet been made at the time of its withdrawal.

Specifically, with effect for tax periods beginning from 1 January 2021, through the modification introduced in article 19,1 of the Spanish Corporation Tax Act 11/2021, of 9 July, is replaced in cases of change of residence from an entity to a Member State of the European Union or the European Economic Area that has concluded an agreement with Spain or with the European Union on mutual assistance in the area of tax credit collection, the possibility that the taxpayer had to postpone the payment of the tax debt resulting from the application of the provisions of the first paragraph of the aforementioned article 19,1 of the Spanish Corporation Tax Act, until the affected capital elements are transferred to third parties, for the possibility of paying this payment in instalments, also at the request of the taxpayer, for three equal annual instalments.

The option will be exercised exclusively in the Corporation Tax return corresponding to the tax period ended when the change of residence occurs, taking into account that the payment of the first instalment must be made in the voluntary period of tax return corresponding to that tax period. The maturity and enforceability of the remaining four annual fractions will be required, together with the late payment interest accrued for each of them, after a year has elapsed since the end of the voluntary filing period corresponding to the last tax period. In addition, it will be required to establish guarantees when it is justified that there are rational indications that the collection of the debt could be considered as being rustated or severely difficult.

Finally, the cases in which the deferral will lose its validity, as well as the consequences of this loss, are included.

Article 65.Dos of Act 11/2020, of 30 December, on General State Budgets for 2021, with effect for tax periods beginning from 1 January 2021 that have not yet been completed at the entry into force of this law ( 01-01-2021) and indefinite term, it modifies the first paragraph of point (a) of article 21,1 of the Spanish Corporation Tax Act and the letter a) of article 21,6 of the Spanish Corporation Tax Act, to establish that dividends or shares in profits of companies will be exempt, when they are met the requirement that the percentage of direct or indirect ownership of the entity's capital or equity be at least , of 5%, eliminating the alternative requirement that the acquisition value of the holding is greater than 20 million euros.

In relation to the above, the transitional provision is added to the Spanish Corporation Tax Act to regulate a transitional regime to be applied for a period from 5 years to the shares acquired in the tax periods beginning before 1 January 2021, which had a higher acquisition value to 20 million euros, without reaching the percentage of 5% established in article 21,1 a) of the LIS.

In addition, section 21 of the LIS is added to article 10, which establishes that the amount of dividends or shares in profits from companies and the amount of the positive income obtained in the transfer of the share in a company and in the rest of cases a as referred to in Article 21,3 of that Act, to which the exemption provided for in the Act is applicable, is reduced for the purposes of the application of this exemption, at 5% for management expenses related to these investments, and section 11, which states that the reduction of 5% applicable to dividends or shares in profits of entities referred to in paragraph 10 shall not apply when the following circumstances occur:

• Dividends or profit shares are received by a company whose net turnover in the previous tax period is less than 40 million euros.

• Dividends or profit shares come from a company incorporated after January 1, 2021, in which the entire capital or equity is held directly and since its incorporation.

• Dividends or profit shares are received in the tax periods that end in the 3 years immediately and subsequent years at the year of incorporation of the entity that distributes them.

Finally, a paragraph is added at the end of article 64 of the Spanish Corporation Tax Act, which states that the amounts that must be integrated into the individual taxable bases will not be removed due to the application of the provisions of article 21,10 of the Spanish Corporation Tax Act.

Article 65.Tres of Act 11/2020, of 30 December, on General State Budgets for 2021, with effect for tax periods beginning from 1 January 2021 that have not yet been completed at the entry into force of this law ( 01-01-2021) and indefinite term, it modifies point (a) of article 32,1 of the Spanish Corporation Tax Act, which regulates the deduction for double international taxation in dividends or profit shares paid by a non-resident entity in Spain, eliminating the alternative requirement that the acquisition value of the share is greater than 20 million euros.

In relation to the above, the transitional provision to regulate a transitional regime to be applied by a period of 5 years to the shares acquired in the tax periods beginning before 1 January 2021, which had a value of acquisition of more than 20 million euros, without reaching the percentage of 5% established in article 32,1 a) of the Spanish Corporation Tax Act.

Finally, section 4 of article 32 of the Spanish Corporation Tax Act is modified to add that, to calculate the full payment, dividends or profit participations will be reduced by 5% as management expenses related to these investments, unless the circumstances of non-application regulated in article 21,11 of the Spanish Corporation Tax Act are met. The excess over this limit will not be considered tax deductible, without prejudice to the provisions of article 31,2 of the Spanish Corporation Tax Act.

With regard to the deduction for investments in Spanish film productions of film and short films and of fiction audiovisual series, animation or documentary, Act 11/2020, of 30 December, on the General State Budget for 2021, with effects for the tax periods beginning from 1 January 2021, modifies Article 36,1 (a) of the Corporation Tax Act , adding that the required certificates will be binding for the Tax Administration, regardless of the date on which they have been issued.

In addition, Royal Decree-Law 17/2020, of 5 May, modifies the definition of cinematographic productions and allows until 31 August 2020 (this period extends until January 31, 2021, as set out in the first section of Order CUD/807 / 2020, of 27 August), are also considered a commercial premiere of a film, without losing its status as a film, resulting the deduction for investments in Spanish film productions regulated by article 36,1 of the Spanish Corporation Tax Act, which is carried out through the television and platforms that offer streaming content (via audio-visual television services, as well as electronic communication services that broadcast television channels or programme catalog services).

On the other hand, the last paragraph of article 39,1 of the Spanish Corporation Tax Act is modified, adding that the limit increased from the deduction to 50 per a percentage will also be applied (in addition to the deduction for research and development and technological innovation activities regulated in article 35 of the Spanish Corporation Tax Act) , to the deduction for investments in cinematographic productions, audiovisual series and live shows of performing arts and music regulated in article 36 of the LIS, when these deductions exceed 10% of the total account reduced by deductions to avoid international double taxation and bonuses.

Section 5 of article 39 of the Spanish Corporation Tax Act is also modified to establish the requirement to maintain the equity elements assigned to deductions to incentivise certain activities regulated in Articles 35 to 38 of the Spanish Corporation Tax Act, which in the case of deduction for investments in production films, audiovisual series and live shows of performing arts and music regulated in article 36 of the Spanish Corporation Tax Act, this requirement shall be understood as being met in the measure that the producer maintains the same percentage of ownership of the work during the period, without prejudice to its ability to market 3 total or partial rights of use derived from it to one or more third parties.

Finally, section 7 is added to article 39 of the Spanish Corporation Tax Act, which extends the application of the deductions regulated in the sections 1 and 3 of article 36 of the Spanish Corporation Tax Act to taxpayers who participate in the financing of Spanish productions of film and short films and audiovisual fiction, animation, documentary and production series and display of live performing arts and musicals performed by another taxpayer. The taxpayer who participates in the financing of these productions must provide amounts for financing, to cover all or part of the production costs without acquiring intellectual or other property rights with regard to the results of the production, which must be owned by the producer in any case. These contributions can be made at any stage of production until the nationality certificate is obtained.

With regard to the deduction for investments in foreign productions of film or audiovisual works, Act 11/2021, of 9 July, on measures to prevent and combat tax fraud, with effects for tax periods beginning after 1 January 2021, incorporates in article 36,2 of the Spanish Corporation Tax Act, some of the requirements that producers who are responsible for of the execution of foreign productions of film productions, in order to apply this deduction.

For these purposes, the certificate issued by the Institute of Cinematography and Audio-Visual Arts, or by the body, is required corresponding to the Autonomous Community, accrediting the cultural nature of production in order to comply with the provisions of the Communication of the Commission on State aid for cinematographic works and other productions in the audiovisual sector, of 15 November 2013. In addition, the incorporation of specific locations for filming in Spain and the authorisation of use in the works'credit certificates is requested of the title of the work and of graphic and audiovisual material of the press that expressly includes specific places for filming or any other process of production carried out in Spain, for the performance of activities and the production of promotional materials in Spain and abroad for cultural or tourist purposes, that state, regional or local entities can carry out with competences in the field of culture, tourism and economy.

Finally, the transitional provision of the second half of the Corporation Tax Act is added, which establishes that the requirements regulated in points (b) and c \') of article 36,2 of the Spanish Corporation Tax Act referred to in the previous paragraph, shall not be enforceable in the case of foreign productions of film and audiovisual productions, with regard to which the contract for the execution of production is carried out it would have been signed before the date of entry into force (11-07-2021) of the Act on measures to prevent and combat tax fraud.

Article 65.Cinco of Act 11/2020, of 30 December, on General State Budgets for 2021, with effect for tax periods beginning from 1 January 2021 that have not yet been completed at the entry into force of this law ( 01-01-2021) and indefinite term, it modifies section 10 of article 100 of the Spanish Corporation Tax Act which establishes that they will not be included in the taxable income for dividends or profit shares in the part corresponding to the positive income that has been included in the taxable base, incorporating , which for these purposes, the amount of dividends or profit shares will be reduced by 5% as management expenses referring to these holdings, unless the circumstances established in article 21,11 of the Spanish Corporation Tax Act are met.

Section 11 of article 100 of the Spanish Corporation Tax Act, which establishes that to calculate the income derived from the transfer of the share, direct or indirect, the acquisition value will increase in the amount of the social benefits that, without effective distribution, correspond to incomes that the members were assigned income from their shares or holdings in the period between their acquisition and transfer, and , for these purposes, that the amount of the social benefits referred to in this section will be reduced by 5% as management expenses related to these investments.

Subsequently, Act 11/2021, of 9 July, on measures to prevent and combat tax fraud, with effects on the tax periods beginning from 1 January 2021, modifies Article 100 of the Spanish Corporation Tax Act in order to transpose Council Directive (EU) 2016/1164 of 12 July 2016.

For these purposes, section 1 of article 100 of the Spanish Corporation Tax Act is modified to establish that the imputation of income produced by application of the international tax transparency system, it not only affects those obtained by entities that are owned by the taxpayer, but also those obtained by their permanent establishments abroad. Section 12 of article 100 of the Spanish Corporation Tax Act is also modified to add the documentation that must be provided together with the Corporation Tax return, for the incomes obtained by these permanent establishments.

Finally, section 3 of article 100 of the Spanish Corporation Tax Act is modified to introduce various types of income that can be attributed to this international tax transparency regime, such as those derived from financial leasing or insurance, banking and other financial activities.

With effect for the tax periods beginning from 1 January 2021, Act 11/2021 of 9 July, on measures to prevent and combat tax fraud, amends article 119 of the LIS to introduce a technical improvement in the regulation of deregistering from the Corporation Tax index, to clarify that the concept of "default" must be applied to debtor entities, and not to loans.

With effect for the tax periods beginning from 1 January 2021, the second Final Provision of Act 11 / 2021, of 9 July, on measures to prevent and combat tax fraud, amends the special tax regime applicable to Companies investment in the Property Market (SOCIMIs), entering in section 4 of article 9 of Act 11/2009, of 26 October, a special levy of 15% on the amount of profits obtained in the financial year that is not distributed , in the part that comes from income that has not been taxed at the general tax rate of Corporation Tax or in the case of income received the reinvestment period of 3 years regulated by Article 6,1 (b) of Act 11/2009.

This special levy will be considered as Corporation Tax liability and will accrue on the day of the agreement to apply the result of the financial year by the general meeting of shareholders, or equivalent body. This special levy must be subject to self-assessment and payment in Form 237 approved by Order HFP/1430/2021 of 20 December, within two months from the accrual date.

Finally, due to the introduction of this special levy, section 1 of article 11 of Act 11/2009 is amended, of 26 October, which regulates the reporting obligations in the annual accounts, to add the obligation to distinguish in this information , the portion of the income subject to the special tax rate of 15%.

1. Deduction for investment in cinematographic production

With effect for the tax periods beginning from 1 January 2021, the first Final Provision of Act 14 / 2021, of 11 October, amending Royal Decree-Law 17/2020, of 5 May, which they approve measures to support the cultural and tax sector to address the economic and social impact of COVID-2019, amending Additional Provision fourteen of Act 19/1994, of 6 July, amending the Canary Islands Economic and Tax Regime, to update the limits applicable to deductions for investments in film productions and audiovisual series made in the Canary Islands.

This establishes that the amount of the deduction for investments in Spanish productions of film and short films and audiovisual fiction, animation or documentary series regulated in article 36,1 of the Spanish Corporation Tax Act, cannot be higher than the result of increasing in 80 % the maximum amount referred to in this article in the case of productions made in the Canary Islands.

In addition, it is established that the amount of the deduction for expenses incurred in Spanish territory for foreign productions of film or audiovisual works regulated in article 36,2 of the Spanish Corporation Tax Act, as well as the amount of the deduction for expenses incurred in the production and display of shows live performing arts and musicals referred to in article 36,3 of the Spanish Corporation Tax Act, may not be higher than the result of increasing 80% of the maximum amount referred to in these articles in the case of expenses incurred in the Canary Islands.

2. Tax regime for vessels and shipping companies in the Canary Islands

With effect for tax periods beginning from 1 January 2021 that have not ended on 11 July 2021 , Act 11/2021, of 9 July, on measures to prevent and combat tax fraud, adds section 3 to Article 73 of Act 19/1994, of 6 July, amending the Canary Islands Economic and Tax Regime, to establish that the vessels of shipping companies registered in the Special Register of Ships and Shipping Companies that are registered in another Member State of the European Union or of the European Economic Area, they are also considered as registered in the Special Register, provided that they meet the requirements that are required of the other vessels for registration.

Introducing a limitation of these applicable bonuses. For these purposes, it is established that when the part of the taxable base that comes from carrying out activities closely related to maritime transport exceeds the taxable income resulting from the activities that generate the right to apply the special regime, the payment corresponding to this excess cannot be subject to a bonus. This limitation shall apply to each of the vessels whose operation generates the right to the bonus.

Finally, it is added in article 76 of Act 19/1994 of 6 July that the resulting negative taxable bases of the activities that generate the right to apply the special regime for vessels and shipping companies in the Canary Islands, they cannot be compensated with taxable bases positive results derived from the rest of the company's activities, the current financial year or subsequent years.

With effect for the tax periods beginning from 1 January 2021, Act 14/2021 of 11 October, amending Royal Decree-Law 17/2020 of 5 May, modifies Article 2 of Act 49 / 2002, of 23 December, to include non-profit entities, and which can thus be considered as beneficiary entities patronage, non-resident entities operating in Spanish territory through permanent establishment and to entities resident in a Member State of the European Union or other Member States of the European Economic Area.

On 31 January 2020, the United Kingdom of the European Union was effectively launched.

However, it should be noted that, in relation to Corporation Tax, there is a bilateral agreement between the United Kingdom and Spain to avoid double taxation, which will continue to apply from 1 January 2021. For these purposes, certain incomes that are no longer exempt from internal regulations would continue to be considered exempt incomes, invoking the right to apply this Agreement.