Corporate tax in Spain: The General State Budget Law, 6/2018, introduces new corporate tax measures which align Spain with the European Union’s tax rules adopted from the OECD BEPS Action 5 report.
Corporate tax in Spain – Reduction of income for intangible assets
The legislation offers a 60% reduction to income from certain intangible assets. It also clarifies the scope of intangibles to include: patents; formulas; utility models; supplementary protection certificates for medical and plant protection products; and drawings.
The legislation includes a transitional regime to address overlap with the old regime. Taxpayers with licenses for intangible assets issued prior to September 2013 may elect to apply the old regime until the end of their licencing agreement or until 30 June 2021.
Tax credits for entertainment productions investments
Producers meeting the following criteria can receive a tax credit equal to 20% of costs incurred in Spain:
- On the Registry of Film Production Companies held by the Ministry of Education, Culture and Sport
- Making foreign productions of feature films, audio-visual works, or live performing arts
- Costs incurred in Spain of at least €1,000,000
To receive the tax credit, producers must:
- Include in the production’s credits and all advertising references to their election of the tax incentive, the filming locations in Spain and the collaboration with any Spanish institutions
- Provide the Film and Audio-Visual Arts Institute (ICAA) with a copy of the audio-visual production, synopsis, and promotional material
- Provide partial reproduction rights to the Spanish government to be used for cultural or tourism purposes.
- Inform the ICAA of the production dates, and total production costs incurred in Spain.
Auditing powers of Administration
The legislation permits tax authorities to audit the conversion of deferred tax assets into claimable amounts. This enables the verification of accounting losses that become active differed tax.
Legal regime of instalment payments
As of 1 January 2018, venture capital entities are exempt from the obligation to make the minimum instalment payment applicable to large companies. This exemption does not apply to repayments for reporting periods prior to 1 January 2018 when the General State Budget Law for 2018 came into force.
Exemption for Port Authorities
The legislation introduces a tax exemption for Port Authorities with respect to the transfer of elements of their fixed assets from State Ports or official credit institutions, provided that the entirety of the transfer is used for loan repayments.
Assignment to activities of social interest
On 5 July 2018, the legislation came into force allowing corporate income tax payers to elect to have 0.7% of their gross tax liability used to fund activities of social interest. This mechanism is like one already used for personal income tax.
For further information regarding changes in corporate tax in Spain, please contact our office.