Fiscal deductions and bonuses for Corporation Tax

The law 27/2014, of 17 November, of the Corporation Tax, It establishes a series of bonuses and deductions to encourage the realization of certain activities. It highlights the elimination of certain incentives considered unnecessary, It enhances other existing ones and introduces two new ones related to net assets.

Next, The modifications introduced and those currently in force are detailed:

• Deductions by environmental investments, by Reinvestment of extraordinary benefits and by Investment of benefits.

• As a novelty for the tax period 2020, and in order to adapt the deduction for investments in foreign audiovisual productions to what the European Commission dictates, The production phase for animation productions is incorporated, consisting of the deduction of 30% of the base, When the producer is responsible for the execution of visual effects and the expenses made in Spanish territory do not exceed one million euros. The percentage of deduction by investments for the rest of the cinematographic productions and audiovisual series to the 20% For the first million euros.

• Another novelty for the tax period 2020, It consists in adapting freedom of amortization to the context of Covid-19 outbreak. It consists of the application of an incentive for investments in new elements of immobilized material carried out and that enter into operation in the tax periods that conclude between the 2 April of 2020 and the 30 June of 2021. In addition, adapts to the European Commission (EU regulations 651/2014) The increase in deduction in innovation in value chain processes of the automobile industry.

• The Capitalization reserve. This consists of the non -taxation of that part of the benefit that is destined to the constitution of an unavailable reserve, without establishing investment requirement. This measure aims to enhance business capitalization through an increase in net assets. Specifically, It is a reduction in the tax base of the 10% of the amount increased in their own funds. All this, attending to the following requirements:

– That the amount of the increase in their own funds is maintained during 5 years from the closure of the tax period to which the reduction corresponds, except for the existence of accounting losses.

– That an unavailable reserve is provided by the amount of the reduction during the previous planned period.

• Compensation of negative tax bases. Highlighting the applicability of taxable bases in the future without a temporary limit, With a limitation of 70% of the taxable base prior to its compensation and admitting, in any case, a minimum amount of 1 Million euros. As counterpart, The deadline provided by the AEAT to verify the origin of the compensation remains established in 10 years.

• For reduced entities dimension, The Base Leveling Reserve negative taxable, with the aim of favoring the competitiveness and stability of the Spanish company. This reservation, It allows anticipating the application in a tax period of negative tax bases that are generated in the 5 following years, minoring the positive tax base of that period to a 10% of its amount. Of not generating negative tax bases, deferral is produced during 5 years of the taxation of the constituted reserve.

• It is maintained, The deduction by investigation, TECHNOLOGICAL DEVELOPMENT AND INNOVATION and the Deduction for employment creation, including the corresponding to workers with disabilities.