What is cashback?
“Cashback” is the monetization of the deduction for R&D&I that companies can request when they have not been able to apply the deduction for Corporation Tax because they do not have a sufficient quota.
Art. 39 of the LIS establishes the limit on the application of deductions for R&D&I, which can never be higher than 50%, unless this cashback mechanism is chosen, which under compliance with a series of requirements (including the loss of 20% of the deduction), eliminates this limit and allows the full application of the deduction and even requests the amount of deduction exceeding the quota as a payment. With this, up to five million can be recovered for each year of execution of the project (depending on your company’s R&D&I expenditure) in a period of approximately two years.
Why should you be interested?
This mechanism is included in the LIS and is therefore applicable to all taxpayers of corporate income tax in Spain (except the Basque Country and Navarre). It is therefore a right of any company carrying out R&D&I projects.
When can it be interesting? Some examples:
- R&D-intensive companies, which generate a high deduction that they cannot apply in full.
- Companies in the initial investment phase, with high R&D expenditure and no turnover: these are companies with a zero quota, which cannot apply the deduction generated.
- Companies in loss: since they do not have a quota, they will accumulate the deduction without knowing when they will be able to apply it. The liquidity of the cashback is therefore more interesting.
- Companies that have accumulated a large amount of tax deduction for R&D&I: although the law establishes 18 years to apply the pending deductions, if there is no provision to apply them in the short term, this mechanism is very interesting.
Ayming is a benchmark consultancy in the field of R&D&I. We have extensive experience in the management of tax and non-tax incentives for R&D&I. We have successfully managed more than 35 million euros of return for our clients via this mechanism, in sectors such as ICT, pharmaceuticals, biotechnology, industrial, chemical, etc… Of the 413 million euros budgeted by AEAT for this mechanism in 2013, Spanish companies have requested only 13, of which 25% has been managed directly by Ayming.
We have specialized teams in each sector and extensive experience in the implementation of this mechanism, so we can advise your company to exercise its right to get this funding for their projects.