How to file a return for previous years

Article 7 of Royal Decree-Law 23/2020, of June 23, as amended by the Eighth Final Provision of Royal Decree-Law 34/2020, of November 17, with effect for the tax periods beginning within the years 2020 and 2021 , establishes that the deduction percentage referred to in letter c) of article 35.2 of the LIS (Corporate Tax Law) will be increased by 38 percentage points for expenses incurred on projects initiated after June 25, 2020 consisting of the performance of technological innovation activities the result of which is a technological advance in obtaining new production processes in the automotive industry value chain or substantial improvements to existing ones. Thus, this deduction is increased depending on the type of taxpayer among those taxpayers who are considered small and medium-sized businesses in accordance with the provisions of Annex I to Commission Regulation ( EU (European Union)) No 651/2014, of 17 June 2014, and those who don't. In the case of taxpayers who do not have that status , the expected increase will be 3 percentage points.

Accordingly, in accordance with the above rules, and medium-sized enterprises be eligible for an increased deduction percentage of percent companies that are considered as such will be eligible for an increased deduction percentage of .Likewise, for the application of this deduction, in addition to the entity having obtained a motivated report , in the terms established in letter a) of article 35.4 of the LIS.

The fourth Final Provision of Royal Decree-Law 23/2020, of June 23, introduced the sixteenth Additional Provision in the LIS , which includes a new assumption of freedom of amortization in investments made in the electric, sustainable or connected mobility value chain.  In this sense, the sixteenth Additional Provision in the LIS , in its wording given by Royal Decree-Law 34/2020, includes the tax incentive of freedom of amortization on investments made in the electric, sustainable or connected mobility value chain for investments made in the tax periods ending between April 2, 2020 and June 30, 2021. In this way, investments in new elements of tangible fixed assets that involve the sensing and monitoring of the production chain, as well as the implementation of manufacturing systems based on modular platforms or that reduce the environmental impact, affected by the automotive industrial sector, made available to the taxpayer and that come into operation between April 2, 2020 and June 30, 2021, may be freely amortized, provided that, during the 24 months following the start date of the tax period in which the acquired elements come into operation, the total average workforce of the entity remains with respect to the average workforce for the year 2019. It should be noted that maximum amount of the investment may benefit from the free amortization regime will be .

In addition, to apply this assumption of freedom of amortization, taxpayers must provide reasoned report issued by the Ministry of Industry, Trade and Tourism to qualify the taxpayer's investment as suitable. This report will be binding on the tax authorities.

This new assumption of freedom of amortization regulated in the Sixteenth Additional Provision of the LIS is incompatible with the assumption of freedom of amortization established in article 102 of the LIS for small entities, so these entities will have to choose to apply one of the two tax incentives.

Spanish film productions (article 36.1 of the LIS)

Royal Decree-Law 17/2020, of May 5, modifies the definition of cinematographic productions and allows that until August 31, 2020 (this period is extended until January 31, 2021 , as established in the first section of Order CUD / 807/2020, of August 27) they also be considered a commercial release of a film , without it losing its status as a cinematographic film, resulting in the deduction for investments in Spanish cinematographic productions regulated in article 36.1 of the LIS, being applicable to the one carried out through television and platforms that offer streaming content (through television audiovisual communication services, as well as electronic communication services that broadcast television channels or program catalog services).

Furthermore, with effect for tax periods beginning on or after 1 January 2020, the First Final Provision of the aforementioned Royal Decree-Law 17/2020 introduces changes to the deduction for investments in Spanish productions of feature films and short films and audiovisual series of fiction, animation or documentary regulated in article 36.1 of the LIS, modifying its requirements and increasing the percentages and their maximum limits:

• The scope of application of the deduction is extended and the investment can also be made in short films (until December 31, 2019, only in feature films) and audiovisual series of fiction, animation or documentary.

• One of the requirements for the deduction is modified, establishing that a new copy of the production must be delivered (until December 31, 2019, the deposit is required) in perfect condition to the Spanish Film Library or the film library officially recognized by the respective Autonomous Community.

• The deduction percentages applicable to the producer of the work are increased:

  • Until 31-12-2019:

    30 percent of the first million of the deduction base.

  • As of 1-1-2020:

    30 percent of the first million of the deduction base.

    25 percent on the excess of said amount.

• deduction base is modified, increasing its maximum amount from 3 million to 10 million euros.

• The percentages are modified in which the limit of 50 percent of the production cost established for the amount of this deduction is raised, together with the rest of the aid received by the taxpayer.

Foreign film productions (article 36.2 of the LIS)

With effect for tax periods beginning on or after January 1, 2020 , the First Final Provision of the aforementioned Royal Decree-Law 17/2020 introduces changes to the deduction for investments in foreign productions of feature films or audiovisual works regulated in article 36.2 of the LIS, modifying its requirements and increasing the percentages and their maximum limits:

• The scope of application of the deduction is modified by establishing that the following producers registered the Administrative Registry of Cinematographic Companies of the Institute of Cinematography and Audiovisual Arts who are in charge of the execution of a foreign production of feature films or audiovisual works that allow the creation of a physical medium prior to their serial industrial production will be entitled to this deduction for expenses incurred in Spanish territory.

• The applicable deduction percentages are increased:

  • Until 31-12-2019:

    20 percent.

  • As of 1-1-2020:

    30 percent of the first million of the deduction base.

    25 percent on the excess of said amount.

• The requirement for applying this deduction that the minimum expenses incurred in Spanish territory be at least 1 million euros is an exception for the pre-production and post-production expenses for animation and visual effects carried out in Spanish territory, establishing said limit at 200,000 euros.

• deduction base is modified, increasing its maximum amount from 3 million to 10 million euros.

  Subsequently, with effect also for tax periods beginning on or after January 1, 2020, the Fifth Final Provision of Royal Decree-Law 34/2020, of November 17, modifies article 36.2 of the LIS in order to adapt the deduction for investments in foreign productions of feature films or audiovisual works to the European Commission Communication on State aid to cinematographic works and other productions in the audiovisual sector:

• The production phase is incorporated for the application of the incentive in animation productions and the application of said incentive is maintained for the execution in Spain of the part of international productions related to visual effects .

• It is established that, in the case of animation productions, the expenses incurred in Spanish territory will be at least 200.00 euros.

• A new percentage of 30 percent is established when the producer is in charge of the execution of visual effects services and the expenses incurred in Spanish territory are less than 1 million euros. The amount of this deduction may not exceed the amount established by Commission Regulation (EU) 1407/2013, of December 18, 2013, relating to the application of articles 107 and 108 of the Treaty on the Functioning of the European Union to minimis aid

With effect for tax periods beginning on 1 January 2019, the sole repealing provision of Royal Decree-Law 28/2018, of 28 December, on the revaluation of public pensions and other urgent measures in social, labour and employment matters, repeals article 4 of Law 3/2012, of 6 July, on Urgent Measures for the Reform of the Labour Market, which established the possibility of entering into open-ended employment contracts to support entrepreneurs.

However, the sixth transitional provision of the aforementioned Royal Decree-Law 28/2018 establishes that open-ended employment contracts to support entrepreneurs signed up to December 31, 2018, are considered valid and will continue to be governed by the regulations in force at the time of their signing, as well as any corresponding incentives.

Therefore, contracts signed during 2018 will generate the right to apply the deduction for job creation under article 37 of the LIS. This deduction, as provided for in article 37 of the LIS, will be applied to the full amount of the tax period corresponding to the end of the one-year trial period required in the corresponding type of contract.

Therefore, if the contract has been validly signed in 2018 and the trial period ends in a year, this deduction can be applied to the full amount for the 2019 financial year, in the event that the tax period coincides with the calendar year.

Regarding the 2020 financial year, the right to apply this deduction cannot be generated since this type of contract cannot be signed as of January 1, 2019.

In the Sixth Final Provision of Royal Decree-Law 26/2020, of July 7, with effect for tax periods beginning on or after January 1, 2020, which have not ended on July 9, 2020 (date of entry into force of this Royal Decree-Law), the following modifications are introduced in relation to the tax regime provided for Port Authorities:

• Port authorities are removed from the list of entities partially exempt from article 9.3 of the LIS.  In this way, the Port Authorities stop applying the tax regime for partially exempt entities regulated in Chapter XIV of Title VII of the LIS , and are now subject to the general regime of the Corporate Tax.

  The reference made to them in letter a) of article 110 of the LIS , on the type of income that is considered not to come from the performance of economic activities, is also eliminated.

• Article 38 bis of the LIS introduces a new deduction in the full fee by which the Port Authorities may deduct from it:

  • Investments and expenses related to certain infrastructures, services, actions, access, safety and security plans and facilities.

  • Investments and expenses made for the construction, replacement or improvement of seaport infrastructure, for the construction, replacement or improvement of access infrastructure thereto or for dredging activities in the terms established in Chapter I and in articles 56 ter and 56 quater of Commission Regulation ( EU ) No. 651/2014 of 17 June 2014 declaring certain categories of aid compatible with the internal market.

  • Investments that exceed the thresholds established in letters e) and f) of article 4.1 of Regulation ( EU ) No. 651/2014 may be deducted to the extent that the European Commission has declared their compatibility with the internal market in accordance and the conditions established by the Commission in the corresponding Decision are met.

• In relation to the new deduction of article 38 bis of the LIS , article 15 n) of the LIS establishes a new assumption of non-deductible expense , according to which those expenses that are subject to the deduction regulated in said article 38 bis of the LIS will not be deductible, including those corresponding to the amortization of assets whose investment has generated the right to the aforementioned deduction.

Royal Decree-Law 35/2020, of December 22, establishes in its article 14 that taxpayers of the Corporate Tax who meet the conditions of article 101 of the LIS to be considered small companies , in the tax periods that begin in the year 2020 and in the year 2021 may deduct , in said periods, the losses due to impairment of credits derived from possible insolvencies of debtors when three months have elapsed since the expiration of the obligation referred to in letter a) of article 13.1 of the LIS.

Therefore, for small companies, the period established to deduct losses arising from the impairment of credits arising from the possible insolvency of debtors has been reduced from 6 months to 3 months, the time that must have elapsed between the obligation becoming due and the accrual of the tax.

Royal Decree-Law 4/2021, of March 9, introduces with effect for tax periods that begin on January 1, 2020 and that have not concluded upon the entry into force of this Royal Decree -law , a new article 15 bis in the LIS , with the aim of transposing the Directive ( EU ) 2016/1164 of the Council, of July 12, 2016 regarding hybrid asymmetries that take place between Spain and other Member States and between Spain and third countries or territories.

This Royal Decree-Law 4/2021 transposes a "primary rule" , understood as the solution considered appropriate to nullify the tax effects of hybrid asymmetry, and a "secondary rule" that will be applicable when the first has not been applied, either because there is a discrepancy in the transposition and application of the Directive even though all Member States have acted in accordance with it or because the hybrid asymmetry involves a third country or territory that does not have provisions to neutralise the effects of such asymmetries.

Finally, Royal Decree-Law repeals article 15 j) of the LIS.

• In the first Final Provision of Royal Decree-Law 34/2020, of November 17, the temporal scope contained in article 27.11 regarding early investments and in article 29.2 regulating the authorization of registration in the official Registry of Entities of the Canary Islands Special Zone (ZEC) of Law 19/1994, of July 6, modifying the Economic and Fiscal Regime of the Canary Islands, is modified, establishing December 31, 2021 as the deadline.

• The Second Final Provision of Royal Decree-Law 39/2020, of December 29, introduces a new eighth transitional provision in Law 19/1994, of July 6, modifying the Economic and Fiscal Regime of the Canary Islands, to extend the deadlines linked to the Reserve for Investments in the Canary Islands.

  For these purposes, the maximum period of three years referred to in article 27.4 of Law 19/1994, of July 6, will be four years for the amounts allocated to the reserve for investments in the Canary Islands endowed , in the terms indicated in its regulatory regulations, with benefits obtained in tax periods beginning in the year 2016.

  Furthermore, the period referred to in the first paragraph of article 27.11 of Law 19/1994, of July 6, will be four years for the advance investments materialized in 2017.

• The third Final Provision of Royal Decree-Law 12/2021 modifies Additional Provision of Law 19/1994, of July 6, modifying the Economic and Fiscal Regime of the Canary Islands, establishing that, with effect for tax periods beginning during the year 2020, raising the limits of deductions for investments in film productions, audiovisual series and live shows of performing and musical arts carried out in the Canary Islands. Thus, the amount of the deduction for investments in Spanish productions of feature films and short films and audiovisual series of fiction, animation or documentary referred to in section 1 of article 36 of Law 27/2014, of November 27, on Corporate Tax, may not exceed to 12.4 million euros when the productions are made in the Canary Islands.

  On the other hand, the amount of the deduction for expenses incurred in Spanish territory for foreign productions of feature films or audiovisual works referred to in section 2 of article 36 of Law 27/2014 may not exceed 12.4 million euros when the expenses are incurred in the Canary Islands.

On 31 January 2020, the United Kingdom effectively left the European Union.

The Withdrawal Agreement provides for a transitional period until 31 December 2020, during which EU legislation on the internal market, customs union and EU policies will continue to apply in the United Kingdom. The European Union has treated the United Kingdom as if it were a Member State, except for its participation in EU institutions and governance structures. In particular, during this period, no customs formalities have been required.

The transitional period ended on 31 December 2020.