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For tax periods starting from 1 January 2018

Listed below are the new features that specifically affect the liquidation of Corporate Tax in 2018 as a result of the regulatory changes in force in said year :

  • For tax periods beginning on or after November 10, 2018, a new letter m) is added to article 15 of Law 27/2014, of November 27, on Corporate Income Tax, by the First Final Provision of Royal Decree-Law 17/2018, of November 8. A new assumption of non-deductible tax expense is regulated establishing that the tax debt of the Tax on Property Transfers and Documented Legal Acts, Documented Legal Acts modality, notarial documents, will not be considered a tax-deductible expense when it involves loan deeds with mortgage guarantee in which the taxpayer is a lender.

  • With effect for tax periods beginning on or after 7 November 2018 the fourth Additional Provision, deduction for investments in the Canary Islands of Law 19/1994, of 6 July is amended, raising the joint limit on the quota in the islands of La Palma, La Gomera and El Hierro so that the minimum cap of 80% will increase to 100% and the minimum differential of 35 points will increase to 45 percentage points when the Community regulations on state aid so permit and the investments are contemplated in Law 2/2016, of 27 September and other laws on measures to regulate the economic activity of these islands.

  • With effect for tax periods beginning on or after November 7, 2018 Additional Provision Fourteen, limits on deductions for investments in film productions, audiovisual series and live performing arts and music shows carried out in the Canary Islands , of Law 19/1994, of July 6, is amended, incorporating the following new features:

    • An increase in the amount of deductions for investments in Spanish feature films, audiovisual fiction series', animations, or documentaries, as referred to in Section 1 of Article 36 of Act 27/2014 of 27 November, on Corporation Tax, which will increase from 4.5 to 5.4 million euros when relating to productions made in the Canary Islands.

    • There will also be an increase from 4.5 to 5.4 million euros for the amount of deductions for expenses incurred in the Canary Islands for foreign feature film productions, or audiovisual works as referred to in section 2 of the article 36 of the Act 27/2014.

    • The minimum sum of expenditure indicated in Section 2 of Article 36 of Act 27/2014, in cases of carrying out post-production or animation services for a foreign production, will be fixed at 200,000 euros for expenditure incurred in the Canary Islands.

    • Finally, the minimum sum of deductions for expenditure incurred in production and live performing arts and musical events as referred to in Section 3 of Article 36 of Act 27/2014 is fixed at 900,000 euros for expenditure incurred in the Canary Islands.

  • In addition, as a supplement to the regime of deductions for incentives and stimuli for business investment in the Act on Corporation Tax applicable in the Canary Islands, for tax periods beginning on or after 7 November 2018 a new Article 94 bis, in Act 20/1991, of 7 June, through which those companies contracting staff to work in the Canary Islands will have the right to the fiscal benefits due to creating employment, as established by fiscal regulations in accordance with the requirements established in them, is added, increasing them by 30 per cent. This amendment includes the application of deductions for job creation in Article 37 of Act 27/2014 and the increase that did not previously exist of 30 per cent on sums deductible both on deductions named in Article 37 and 38 on deductions for the creation of employment for workers with disabilities of the aforementioned Act 27/2014.

  • With effect for tax periods beginning on or after 1 January 2018 a new Additional Provision fourteenth bis Corporate Tax is added. Application of the fiscal consolidation regime to companies with branches in the Canary Islands Special Zone in Act 19/1994 of 6 July, establishing that the application of the special tax rate stated in Article 43 of this Act in the case of in branches in the Canary Islands Special Zone of companies with fiscal residence in Spain will not impede these companies from forming a fiscal group employing the fiscal consolidation regime stipulated in Chapter VI of Title VII Act 27/2014 of 27 November, on Corporation Tax. Notwithstanding the above, the part of the gross tax rate of the company forming part of a fiscal group, that is attributable to the Special Canary Islands Zone branch, will not be included in the company's individual gross tax base for the purpose of determining the fiscal group's gross tax base, and will be determined separately in legally-determined terms.

  • With effect for tax periods beginning on or after 7 November 2018 Section 1 of the Fourteenth Additional Provision of Law 27/2014 on Corporate Income Tax is amended, establishing that in the case of Shipping Companies to which the bonus established in article 76, sections 1 and 2, of Law 19/1994, of 6 July, amending the Economic and Tax Regime of the Canary Islands, applies, the positive result will be taken exclusively from non-bonus income. And that in the case of shipping companies that pay taxes under the Special Regime based on tonnage established in Chapter XVI of Act 27/2014 of 27 November, on Corporation Tax, instalment payments will be calculated on the amount of gross tax base obtained under that established by Article 114.1 of this Act (containing the special rule on setting the gross tax base according to each ship's net registered tonnage).

    In both cases this compensates for the adverse impact of determining instalment payments introduced by the minimum instalment payment rule without considering that these companies can apply, respectively, both a subsidy of 90 per cent of the income deriving from operations of ships registered in the Special Registry, or determining their gross tax base according to the regulations cited in the Special Regime based on Tonnage.

  • Main changes introduced by Royal Decree 1074/2017 of 29 December in the Corporate Tax Regulations, approved by Royal Decree 634/2015 of 10 July:

    • Modification of the regulation of information and documentation on related entities and operations . With effect for tax periods beginning on or after 1 January 2016, section 1 of article 13 of Royal Decree 634/2015, of 10 July, is amended, clarifying the subjective scope of the entities that must provide information and documentation on related entities and transactions. In this regard, it clarifies the inclusion of permanent establishments in Spanish territory of non-resident group entities obliged to provide documentation as per article 14 of the Regulations. The case set forth in the previous letter a) of section 1 of article 13 regarding reporting obligations is removed.

      Furthermore, the following exception is included -there shall be no reporting obligation for subsidiaries or permanent establishments in Spanish territory when the multinational group has designated a group subsidiary resident in a member State of the European Union to present this information, or when the information has been reported in its territory of tax residence by another non-resident entity appointed by the parent company of the group as representative for these reporting purposes. In the case of an appointed entity with tax residence in a territory outside the European Union, the conditions set forth in paragraph 2, section II, annex III of Council Directive 2011/16/EU of 15 February 2011 must be complied with in relation to administrative cooperation in the tax area, which repeals Directive 77/799/CEE.

      The following clarification is added: in the event that there are several subsidiaries resident in Spanish territory, one of these shall be appointed by the multinational group to report the information, and shall be solely obliged to do so.

      Lastly, it is added that in the event that the non-resident entity were to refuse to provide all or part of the required information corresponding to the group to the entity resident in Spanish territory or the permanent establishment registered there, the latter shall report the information available to them and notify the Tax Agency of this circumstance.

    • Modification of the regulation of information country by country . With effect for tax periods beginning on or after 1 January 2016, letter e) of section 2 of article 14 of Royal Decree 634/2015 is amended, incorporating among the information to be provided, in addition to the Amount of the capital figure, other undistributed results on the date of conclusion of the tax period.

    • Modification of the regulation of the exceptions to the obligation to withhold and pay into account . With effect for tax periods beginning on or after 1 January 2018, letters u), y) and z) of article 61 of Royal Decree 634/2015 are amended, exempting from the obligation to withhold tax on amounts paid by open pension funds as a result of the reimbursement or mobilisation of shares in investor pension funds or investor pension plans, in accordance with the provisions of the consolidated text of the Law on the Regulation of Pension Funds and Plans, approved by Royal Legislative Decree 1/2002, of 29 November, and its implementing regulations, as well as on income derived from the reimbursement or transfer of shares or stock in the funds and companies regulated by article 79 of the Implementing Regulations of Law 35/2003. Finally, an exemption is established from the obligation to perform withholdings of remunerations and compensation for economic rights received by central counterparties on transactions involving securities loans carried out in accordance with section 2 of article 82 of Royal Decree 878/2015 of 2 October, on compensation, settlement and registration of marketable securities represented by book entries, on the legal regime of central securities depositaries and central counterparties and on the transparency requirements of securities issuers admitted for trading on an official secondary market. Similarly, central counterparties are also exempt from the obligation to perform withholdings of remunerations and compensation for economic rights paid as a result of the securities loans referred to in the previous paragraph. These conditions are without prejudice to the requirements of the said earnings to the withholdings applicable in accordance with the corresponding regulatory standards of the personal income tax of the beneficiary of these earnings. These withholdings shall, where applicable, be made by the participating entity brokering the payment thereto, for the purposes of which they will not be understood to be undertaking a simple payment brokerage.

    • Modification of the regulation of the subjects obliged to retain or make payment to account . With effect for tax periods beginning on or after 1 January 2018, section 8 of article 62 of Royal Decree 634/2015 is amended, establishing that in operations carried out in Spain by insurance entities domiciled in another Member State of the European Economic Area that operate in Spain under the free provision of services regime, the insurance entity shall be required to make a withholding or payment on account. *Adaptation to Law 27/2014, on Corporate Tax. With effect for tax periods beginning on or after 1 January 2018, various sections of article 69 of Royal Decree 634/2015 are amended to adapt them to the Corporate Tax Law and specifically establishes, with respect to the procedure for offsetting and paying claims against the Public Treasury, that deferred tax assets corresponding to provisions for impairment of credits or other assets arising from possible insolvencies of debtors not related to the taxpayer, not owed to public law entities and whose deductibility does not occur by application of the provisions of article 13.1.a) of the Tax Law, as well as those derived from sections 1 and 2 of article 14 of the Tax Law, corresponding to provisions or contributions to social security systems and, where applicable, early retirement, may be converted into a claim against the tax authority, under the terms established in the Sections 1 and 2 of Article 130 of the Tax Law.

    • Order HAC/941/2018, of September 5, amending Order HFP/227/2017, of March 13, approving form 202 for making fractional payments on account of Corporation Tax and Non-Resident Income Tax, incorporated in the Sole Additional Provision the possibility of expressing the will to allocate 0.7 percent of the full Corporation Tax quota to subsidize activities of general interest considered to be of social interest, provided for in the One Hundred and Third Additional Provision of Law 6/2018, of July 3. This option may be exercised by those taxpayers whose tax period ends after the entry into force of the aforementioned Law 6/2018, of July 3, by marking the box with the number 00073 “Other options” in the “Other characters” section of the first page of said model 200 on form 200, or in form 220, box 069 “Other options” included in the “Other characters” section of the first page.»

    • Order HAC/554/2019, of April 26, approving models 200 and 220 for 2018 , maintains these boxes by changing their literal: “Option of 0.7% of the full quota for social purposes (DA 103 Law 6/2018)”.