News about Corporate Tax 2018

The General State Budget Law for the year 2018 (Law 6/2018) has led to several legislative changes, among others, the corporate tax. In this post, we want to talk to you about the new IS applicable from fiscal year 2018.

During Spain’s economic crisis, income from Corporate Tax was significantly reduced, and currently, pre-crisis levels have not yet been recovered. However, it is worth noting that in 2017, the general tax rate in Spain remained at 25%, below other European countries such as France at 44.43%, Belgium at 33% or Greece at 29%.

In general, the vital news to the IS in 2018 has the objective of increasing the income derived from said tax.

Main new features in IS 2018

The most notable new features of the IS in 2018 are the following:

• Modification of the regulation of the reduction of income from certain intangible assets (Patent Box). The modification applies to tax periods that begin on or after January 1, 2018. In this sense, article 23 of the Corporate Tax Law is modified, and the income that will be entitled to the reduction is delimited.

Specify that a transitional regime has been created that will apply to the intangible assets that the taxpayer had at their disposal before July 1, 2016.

• Modification of the deduction for investments in film productions, audiovisual series, and live performing arts and musical shows. To qualify for this deduction, a series of requirements must be met:
  • Include in the credits and advertising of the production a reference to having taken advantage of this deduction.
  • Send to the ICAA a copy of the audiovisual production, the synopsis and the technical and artistic date, the promotional graphic material and work stills.
  • Commitment of companies that benefit from the deduction to assign the rights of partial reproduction of audiovisual works and graphic materials delivered to produce promotional materials for cultural and tourist purposes.
  • Inform the ICAA of the start and end date of production and the amount of the total production expenditure carried out in Spain.
• Modification of the powers of the Administration to determine the tax base and other tax elements. With effect from July 5, 2018, the powers of the Tax Administration are expanded to verify the right to invest deferred tax assets generated through losses in a claim payable to the Tax Administration.
• Modification of the legal regime for installment payments. This means that venture capital entities are exempted from the obligation to make minimum instalment payments. Attention: this measure did not apply to those payments whose declaration period had begun before July 5, 2018.
• Modification of the IS Law derived from the taxable person of the AJD. As we know, after various judicial decisions, the government established that banks must assume the payment of the AJD on mortgages. This means that in IS law, the amount of the AJD payment is considered a non-deductible expense.

As you have seen, the changes in the IS Law 2018 have significant implications on the calculation of Corporate Tax for previous years. These changes must be carefully considered when declaring corporate tax.