National Shoots and Co-productions
Spanish productions and international co-productions in Spain can access tax deductions on Corporate Tax.
The current regulations are Law 27/2014, of November 27, on Corporation Tax, in particular, in its articles 36.1 and 39.
The regulations that regulate these incentives can be changed every year, so it is advisable to find out about the modified aspects in the year in which the investment is expected to be made.
Investments in Spanish productions of feature films and short films and audiovisual fiction, animation or documentary series, which allow the preparation of a physical support prior to their serial industrial production, entitle the producer or taxpayers who participate in the financing to a deduction:
a) 30 percent of the first million deduction base.
b) 25 percent on the excess of said amount.
- The base of the deduction is equal to the total cost of production plus the cost of copies, publicity and promotion paid by the producer (with a limit of 40% of production costs).
- The law establishes a territorial requirement: 50% of the deduction base must correspond to expenses incurred in Spanish territory.
- Deduction limit: 20 million euros for each production. In the case of audiovisual series. the deduction will be determined per episode and the limit will be 10 million euros per episode
- In the event of a co-production, the amounts will be determined, for each co-producer, based on their respective percentage of participation in the co-production.
- For the application of the deduction, it will be necessary to comply with the following requirements:
a) That the production obtains the corresponding certificate of nationality and the certificate that accredits the cultural character in relation to its content, its connection with the Spanish cultural reality or its contribution to the enrichment of the cultural diversity of the cinematographic works that are exhibited in Spain , issued by the Institute of Cinematography and Audiovisual Arts, or by the corresponding body of the Autonomous Community with competence in the matter. Said certificates will be binding for the competent Tax Administration in terms of accreditation and application of the previous tax incentives and identification of the beneficiary producer, regardless of the moment of their issuance.
b) That a new and in perfect condition copy of the production be delivered to the Spanish Film Library or the film library officially recognized by the respective Autonomous Community.
- The deduction will be generated in each tax period for the production cost incurred in it, although it will be applied from the tax period in which the production of the work ends. In the case of animated productions, the deduction provided for in this section will be applied from the tax period in which the certificate of nationality is obtained.
- The base of the deduction will be reduced by the amount of the subsidies received to finance the investments that generate the right to deduction.
- The amount of this deduction, together with the rest of the aid received, may not exceed 50 percent of the cost of production. However, this limit is higher in certain cases: short films, new directors, co-official languages other than Spanish, works directed by people with disabilities, works directed by women, works of special cultural and artistic value, documentaries, animation works with a lower budget. to 2.5 million euros, cross-border productions and international co-productions with Ibero-American countries.
There are details in the regulations that are not presented here, so we recommend going to the literalness of articles 36.1 and 39, as well as the responses of the Tax Agency to the binding queries already made. (some aspects are included in the Frequently Asked Questions section).
It has special conditions to access tax incentives for being an insular and outermost territory. Spanish regulations are applied with a series of particularities:
- The deduction amounts to 50% of the deduction of the first million euros and 45% on the excess of said amount if it exceeds that amount, with a maximum of 10 million euros per production. (The limit is scheduled to rise to 18 million, pending approval)
For the application of the deduction, it will be necessary to comply with the following additional requirements:
- The production must obtain the Canarian audiovisual production certificate
- There is a minimum shooting time in the Canary Islands depending on the type of production
- The production company must be registered in the Registry of Film Companies of the Canary Islands.
As a foral territory with its own tax system, Navarra has its own regulations on Corporation Tax that govern the tax benefits applicable in this autonomous community.
It is regulated by Ley Foral 26/2016, of December 28, on Corporation Tax and the deduction amounts to 35% of the deduction base and can reach up to 40% for the first million in certain cases
As regional territories with their own tax system, Gipuzkoa, Bizkaia and Araba (Basque Country) have their own specific regulations on Corporation Tax that govern the applicable tax benefits.
International co-productions governed by international agreements and that are considered national are considered national productions that can benefit from tax deductions for investment in film and audiovisual productions, in addition to being eligible for ICAA financial aid for creation, production, and promotion.
You can find more information at the following link: co-production-agreements
Advice and Binding Consultations
From Spain Film Commission we recommend that the production have the advice of a cabinet specially dedicated to fiscal taxation and, if it is specialized in audiovisual productions, better.
Binding consultations are documents through which any taxpayer can contact the Administration to ask about the interpretation and application of the rules. Therefore, any production can request the Tax Agency through specific questions the answer to their doubts about the application of the tax incentive. The Tax Agency guarantees that the response offered is the only possible interpretation of the tax law. These binding consultations offer legal certainty to the taxpayer because the provisions of them cannot be contradicted.