Spain offers tax incentives for international films and television series which, together with the benefits of the territory and the audiovisual industry, make the country one of the most competitive destinations in the world for audiovisual production.
The producers who are in charge of the execution in Spain of a foreign production of feature films or audiovisual works that allow the preparation of a physical support prior to their serial industrial production are entitled to tax deductions for the expenses incurred in Spanish territory.
The current regulations are Law 27/2014, of November 27, on Corporation Tax, in particular, in its articles 36.2 and 39, as well as article 45 of Royal Decree 634/2015, of July 10, by which the Corporate Tax Regulations are approved. 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.
These incentives are applicable to Spanish producers registered in the Registry of Cinematographic Companies of the Institute of Cinematography and Audiovisual Arts of Spain who are in charge of the execution of a foreign production. This means that it is the Spanish company that assumes the production that has to carry out all the procedures to qualify for the tax deduction.
- The amount of the deduction will be 30% with respect to the first million euros and 25% for the rest of the expense made in Spain.
- 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.
- The base of the deduction is the following expenses made in Spanish territory directly related to production (eligible expenses):
- The expenses of creative personnel, as long as they have tax residence in Spain or in a Member State of the European Economic Area
- And the expenses derived from the use of technical industries and other providers
- The amount of this deduction, together with the rest of the aid received, may not exceed 50 percent of the cost of production.
- The deduction will be applied provided that the expenses incurred in Spanish territory are at least 1 million euros. There are the following exceptions:
1.- Animation: the amount of expenses incurred in Spanish territory will be at least 200,000 euros
2.- Visual effects services: when the producer is in charge of the execution of visual effects services and the expenses incurred in Spanish territory are less than 1 million euros, they may obtain a 30% deduction. The amount of this deduction may not be exceed the amount established by Commission Regulation (EU) 1407/2013, of December 18, 2013, regarding the application of articles 107 and 108 of the Treaty on the Functioning of the European Union to de minimis aid.
- According to article 45 of Royal Decree 634/2015, of July 10, which approves the Corporate Tax Regulation, the productions that generate the right to the aforementioned deduction must have a minimum cost of 2 million euros and the base of the deduction may not exceed 80 percent of the total cost of production.
- Procedure: The Spanish production company in charge of the international production must present the liquidation of all eligible expenses in the month of July of the fiscal year after the date of filming and request reimbursement.
- For the application of the deduction, it will be necessary to comply with the following requirements:
- That the production obtain the corresponding certificate that accredits the cultural character in relation to its content or its link with the Spanish or European cultural reality, issued by the Institute of Cinematography and Audiovisual Arts, or by the corresponding body of the Autonomous Community competent in the matter. This requirement will not be enforceable for the application of the deduction to visual effects services.
- That a specific reference to having taken advantage of the tax incentive be included in the final credits of the production; the collaboration, where appropriate, of the Government of Spain, the Autonomous Communities, the Film Commissions or the Film Offices that have been directly involved in the filming or other production processes carried out in Spain, as well as, where appropriate, the specific filming locations in Spain and, in the case of animated audiovisual works, the location of the studio entrusted with the production service.
- That the rights holders authorize the use of the title of the work and of graphic and audiovisual material for the press that expressly includes specific places of filming or any other production process carried out in Spain, for carrying out activities and elaboration of promotional materials in Spain and abroad for cultural or tourist purposes, which may be carried out by state, regional or local entities with competences in matters of culture, tourism and economy, as well as by Film Commissions or Film Offices that have intervened in the realization of the filming or production.
There are details in the law that are not presented here, so we recommend going to the letter of the Corporate Tax Law and Regulations and the responses made by the Tax Agency to the binding queries already made (some aspects are included in the section Frequent questions).
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 first million euros and 45% on the excess of said amount, with a maximum of one million euros per production.
- 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.
• The production company must be registered in the Registry of Film Companies of the Canary Islands.