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The 7 Types of Tax Deductions Included in the Corporate Income Tax Law

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The 7 Types of Tax Deductions Included in the Corporate Income Tax Law
Articles in English
agosto 31, 2016

 

In this article we are going to detail what is a tax deduction and the rates that are included in the Corporate Income Tax Law. In this way, we can get an idea of the main tax incentives offered by the State to companies.

 

A deduction is a method by which the taxes that a taxpayer or a company pays to the Internal Revenue Service are reduced. In order to carry out this process, certain requirements and parameters established in the legislation must logically be met.

In the case of companies, deductions usually reduce expenses related to professional or economic activity. These deductions are normally used to promote specific behaviours (such as reducing CO2 emissions or increasing the percentage of indefinite contracts) that improve sustainable development, innovation, and corporate social responsibility.

Types of tax deductions

Deductions aimed at encouraging certain activities are included in the Corporate Income Tax Law (Chapter IV, Articles 35-39).

Deduction for R&D activities

In many occasions, the investment in R&D of the companies entails an important investment in favor of the investigation and the advance. For that reason, the state rewards companies that contribute value in this field with a special type of deduction, the deductions for activities of development of R&D.

In many occasions, the investment in R&D of the companies entails an important investment in favor of the investigation and the advance. For that reason, the state rewards companies that contribute value in this field with a special type of deduction, the deductions for activities of development of R&D.

To know the deduction percentage, you first have to calculate how much you have invested in R&D on average while considering the two previous years. In addition, the state rewards those who invest in R&D and increase their investment each year. So if in the year in which you are going to apply the deduction, the investment is greater, a 25% reduction is applied over the calculated average and a 42% reduction over the rest.

In addition, we must add 17% in the expenditure of qualified personnel in R&D, since jobs are being generated.

Deductions for technological innovation activities

The discount is 12% on the amount invested in technological innovation.

Deduction for investments in Spanish film productions

Two deductible rates apply here. The first rate is 20% on the first million and then 18% on the rest. This reduction is made on the total cost of production including advertising, promotion… The limit is set at 40% of total production.

Deductions for foreign cinematographic productions in Spain

The discount is 15% of the costs incurred in our country. This deduction has one exception: it is only applicable to expenses less than 1 million euros.

Deduction for productions of certain shows

The discount rate is 20% on direct artistic costs; technical and promotional.

Deduction for job creation

As a result of the 2012 labour reform, companies will deduct 3,000 euros for the first worker under 30 years with an indefinite contract (Law 3/2012 on Labour Reform).

In addition, if that worker was an unemployed beneficiary of a contributory benefit, the deduction will be 50% on the lesser of these two amounts:

  • The unemployment benefit that the worker had yet to receive during hiring.
  • The one corresponding to 12 monthly payments of the unemployment benefit that you have recognized.

If you want to pay less taxes with your business, contact Ayming. We are a multinational company with years of experience in the sector.

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