28/01/2021
Spanish productions and international co-productions can gain access to tax credit on Corporation Tax once they have obtained their Spanish nationality and cultural certificates issued by the ICAA, and once a copy of the production has been deposited at the Spanish Film Archive or in a film library which is officially recognised in an Autonomous Community.
GENERAL TAX REGIMEN (Except for the Canary Islands, Navarre and the Basque Country)
Current legislation: Article 36.1. Law 27/2014 dated the 27th of November, on Corporation Tax. Tax Credit for investment in film and series audiovisual productions, live performances and musical shows. The laws which regulate these incentives can change every year, so it is worth finding out what, if any, aspects have changed, during the year you are making the investment. (Translation is available in this link) Summary of the article:
- Spanish investments in film and audiovisual production are often carried out via an EIG (Economic Interest Grouping) which is set up as the film's producer. These investments give the producer the right to a tax credit of 30 % of the first million Euros, and 25% if the investment is higher, with a maximum of 10 million Euros per production.
- The base for the deduction is equal to the total production cost plus the cost of copies, advertising and promotion financed by the producer (with a limit of 40% of the production cost).
- The law establishes a territorial requirement and 50% of the deduction base must correspond to the expenses incurred in Spain.
- It also specifies that the total tax incentive amount received must not exceed 50% of the production cost.
- In the case of a co-production, the amounts will be determined for each co-producer, according to their respective share-percentage of the co-production.
-Once the film's nationality certificate has been obtained and the rest of the requirements have been fulfilled, the tax rebate can be applied for during the month of July in the year after the production end-date.
The law includes further details which are not listed here, so we do recommend you read Article 36.1 in its entirety as well as the replies posted by the Inland Revenue Agency in response to the binding queries (some of these are featured in our Frequently Asked Questions section).
CANARY ISLANDS The Canaries boast special conditions when it comes to tax incentives, as they are an insular and outlying territory. The same common law is applied with a series of mark-ups. The following are the most important points to consider:
- 50% tax credit for the first million Euros and 45% if it is over that amount, with a maximum of 5.4 million Euros per production.
- The production must obtain a Canaries cinema certificate
- The production must include a minimum of two weeks of shooting in the Canary Islands.
- It must hire local professionals and the producers must be registered in the Canary Islands’ Film Companies Register.
As chartered territories with their own taxation system, Navarre and the Basque Country have their own Corporation Tax Laws which applicable tax benefits are subject to in these communities.
NAVARRE Regulated by Article 65.1. Regional Order 24/1996, dated the 30th of December, on Corporation Tax (Text applicable on the 31st of December 2016) Tax credit for investments in film and series audiovisual productions. The following are the most important points to take into account:
- 35% tax credit.
- The rebate is applied with no quota limit.
- At least 25% of the deduction base must correspond to expenses incurred in Navarre.
BASQUE COUNTRY. Each chartered territory (Gipuzkoa, Bizkaia and Araba) has its own law, in general they have the same or a similar composition. The following are the most important points to take into account:
- 30% tax credit.
- The incentive is applied with no quota limit.
International co-productions
International co-productions governed by international agreements and those considered national are treated as national productions, and this means that they can benefit from tax rebates for investment in film and audiovisual productions, as well as being able to apply for funding from the ICAA for creation, production and promotion.
You can find more information in the following link co-production-agreements
Consultancy services and binding inquiries
At Spain Film Commission we recommend that production companies seek advice from an office or professional who specialises in taxation and if they also specialise in audiovisual productions then even better.
Binding inquiries are documents through which any taxpayer can contact the public administration to enquire about the interpretation and application of regulations. Any production can request information from the Inland Revenue offices by way of specific questions about how the tax incentives are applied. The Inland Revenue guarantees that the replies given are the only possible interpretation of the tax regulations concerned. These binding inquiries offer the taxpayer legal security as they cannot be contradicted.
