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Tax periods starting from 1 January 2017

The new features that specifically affect the liquidation of Corporate Tax in 2017 are the following :

  • Civil companies with a commercial purpose will be considered taxpayers of Corporate Tax as of January 1, 2016.

  • Intangible assets will depreciate according to their useful life. When this cannot be estimated reliably, the depreciation will be deductible with the annual maximum limit of one twentieth of their amount. The differentiation between intangible assets of a definite and indefinite useful life has been removed.

  • F trading wave:  Its amortization is tax deductible up to a maximum annual limit of one twentieth of its amount.

  • In tax periods starting on or after 1-1-2017 the following will not be deductible:

    1. Impairment losses on tangible fixed assets, real estate investments and intangible fixed assets (including goodwill).

    2. Impairment losses of values that represent a shareholding or equity stake in the company, when one of the following circumstances is met:

      1. in the tax period in which the impairment has been recorded, the requirement established in Article 21, section 1, letter a) of this Act is not met, and
      2. in the event of a shareholding or equity stake in non-resident companies in Spain, the requirement established in section 1, letter b) of said article is met.

    3. Impairment losses on debt securities.

      The impairment losses indicated will be deductible under the terms established in article 20 of the Spanish Corporation Tax Act. In the case of letter b) above, these will be deductible provided that the circumstances indicated do not arise during the year prior to the day on which the transfer or withdrawal of the shareholding takes place.

  • For tax periods beginning on or after 1-1-2017, decreases in value arising from the application of the fair value criterion corresponding to securities representing participations in the capital or equity of entities referred to in letter K of article 15 LIS, which are recorded in the profit and loss account, will not be deductible, unless, previously, an increase in value corresponding to homogeneous securities of the same amount has been integrated into the tax base, where appropriate.

  • For tax periods beginning on or after 1-1-2017, changes in value arising from the application of the fair value criterion will have no tax effects as long as they do not have to be allocated to the profit and loss account, without prejudice to the provisions of letter l) of article 15 of the LIS. The amount of accounting revaluations shall not be included in the gross tax base, except when they are carried out in virtue of legal or statutory standards that require their amount to be included in the income statement. The amount of the revaluation not included in the gross tax base shall not establish a value, for tax purposes, greater than the elements being revalued.

  • Dividends or profit shares of entities resident and non-resident in Spanish territory will be exempt if they meet requirements a) and b) of the first section of article 21 LIS. As of 1-1-2017, the requirement established in letter b) will not be deemed to be met when the participating entity is resident in a country or territory qualified as a tax haven, except when it is resident in a Member State of the European Union and the taxpayer proves that its incorporation and operation respond to valid economic reasons and that it carries out economic activities.

  • The application of the exemption to income obtained from the transfer of the participation of an entity not resident in Spanish territory provided for in article 21 LIS for tax periods beginning on or after 1-1-2017 will have special features.

  • As of January 1, 2017, positive income derived from the transfer of a permanent establishment or cessation of its activity will be exempt when it has been subject to and not exempt from a tax of an identical or analogous nature to this Tax with a nominal rate of at least 10% or, in the terms of section 1 of article 21 of the LIS. Negative income derived from the transfer of a permanent establishment will also not be incorporated into the gross tax base. Nevertheless, negative income generated will be tax deductible in the event of the termination of a permanent establishment. In this case, the amount of the negative income will be reduced by the amount of net positive income acquired previously, and which was subject to the application of an exemption or deduction regime to avoid double taxation, for the amount thereof.

  • As of January 1, 2017, the exemption of article 22 LIS will not apply when, with respect to income obtained abroad, the circumstances provided for in section 9 of article 21 of the LIS occur. The option referred to in letter c) of said section will be exercised for each permanent establishment outside of Spanish territory, even if there are multiple permanent establishments in the territory of a single country.

  • With effect from 1 July 2016 the method of calculating the reduction in income from certain intangible assets is modified.

  • For tax periods beginning on or after 1-1-2017, the limits applicable to the offset of negative tax bases and deferred tax assets will be as follows, based on the net amount of turnover during the 12 months prior to the date on which the tax period begins:

    • Turnover of less than €20m: 70%
    • Turnover equal to or greater than €20m and less than €60m: 50%
    • Turnover equal to or greater than €60m: 25%

  • For these taxpayers, compensation of negative gross tax bases cannot exceed the calculation of applying the previous percentages to the gross tax base before applying the capitalisation reserves and said compensation. In any case, negative gross tax bases can be compensated during the tax period up to the amount of €1m.  

    This limitation will not be applicable to the amount of income corresponding to debt reduction as a result of reaching an agreement with the taxpayer's creditors.

  • The general tax rate will be 25%.

    Small-sized companies will also be taxed 25% on the total of the gross tax base.

  • For tax periods beginning on or after 1 January 2016 a limit is set for the application of deductions for double taxation, generated or pending offset, which is set at 50% of the total amount for taxpayers whose net turnover is at least €20M during the 12 months prior to the date on which the tax period begins.

  • The offsetting of impairment losses of securities that represent the stake in entities' own capital or funds, generated prior to 1-1-2013, will be formed, at a minimum, by parts that are equal to the gross tax base corresponding with each of the first five tax periods after 1 January 2016. If in said period these securities are transferred, quantities pending offsetting will be integrated into the gross tax base of the fiscal year, with the limit of the positive income derived from this transferal.

  • In the case of the transfer of a permanent establishment in a tax period beginning on or after 1-1-2016, the taxable base of the transferring entity resident in Spanish territory will be increased by the amount of the excess of the net negative income generated by the permanent establishment in tax periods beginning before 1-1-2013 over the net positive income generated by the permanent establishment in tax periods beginning on or after that date, with the limit of the positive income derived from the transfer thereof.

  • When the taxpayer includes in the gross taxable base income obtained in another country, for which tax has been paid in that country, the deduction to avoid double taxation, as regulated in Article 31 of the Corporation Tax Act, can be applied. For tax periods beginning on or after 1-1-2017, it is specified that positive income must be integrated.

  • For tax periods beginning on or after 1 January 2017, if negative income has been obtained from the transfer of a share in an entity that had previously been transferred by another entity in the group the negative income should not be taken into account for the purposes of the deduction to avoid international double taxation.

  • With effect for tax periods beginning on or after 1 January 2017 investments in Spanish productions of feature films and audiovisual series of fiction, animation or documentaries, which allow the creation of a physical medium prior to their serial industrial production, will entitle the producer to a deduction:

    • 25 percent of the first million of the deduction base.
    • 20 percent of the excess amount.

    The basis for the deduction will be the total cost of production, as well as the costs of obtaining copies and the advertising and promotion costs borne by the producer up to a limit of 40 percent of the cost of production for both. At least 50 percent of the deduction base must correspond to expenses incurred in Spanish territory. The deduction cannot be greater than 3 million euros. In cases of coproduction, the amount for each coproducer will be determined according to their respective percentage of participation. The production costs incurred in each tax period will qualify for this deduction, although it will be applied with effect from the tax period in which production of the work is concluded. Nonetheless, in the case of animations, the deduction will be applied with effect from the tax period in which the certificate of Spanish nationality is obtained. The basis for assessment will be reduced by the amount of any grants received to finance investments entitling the producer to this deduction. The amount of this deduction, together with the rest of the aid received by the taxpayer, may not exceed 50 percent of the cost of production. However, this limit will be raised to:

    • 60% in the case of cross-border productions financed by more than one Member State of the European Union and involving producers from more than one Member State.
    • 70 percent in the case of productions directed by a new director with a production budget of no more than 1 million euros.

    For tax periods beginning on or after 1 January 2017 producers registered in the Registry of Film Companies of the Ministry of Education, Culture and Sport who are in charge of the execution of a foreign production of feature films or audiovisual works that allow the creation of a physical support prior to their serial industrial production will be entitled to a deduction of 20% of the expenses incurred in Spanish territory, provided that the expenses incurred in Spanish territory are at least 1 million euros. The basis of assessment will include the following expenses made in Spanish territory directly relating to the production:

    1. Expenses for creative staff, provided that they have tax residence in Spain or in a member state of the European Economic Area, with a limit of 100,000 euros per person.
    2. Expenses deriving from the use of technical industries and other suppliers.

    The amount of this deduction may not exceed 3 million euros for each production carried out. This deduction is excluded from the limit referred to in the last paragraph of section 1 of article 39 of the LIS (Spanish Corporation Tax Act). This deduction will not be taken into account for the purpose of the calculation of the aforementioned limit. The total deduction, together with other allowances received by the taxpayer, cannot exceed 50% of the cost of production.