Spain 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.
Producers who are responsible for 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 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 Corporation Tax Regulation is approved. The regulations that regulate these incentives can be varied each year, so it is advisable to find out about the modified aspects in the year in which the investment is planned.
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: 10 million euros for each production
- The basis of the deduction is the following expenses incurred in Spanish territory directly related to production (eligible expenses):
- The expenses of creative staff, provided they have tax residence in Spain or in a member state of the European Economic Area, with a limit of 100,000 euros per person
- And the expenses derived from the use of technical industries and other suppliers
- 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 as long as 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, he may obtain a deduction of 30%. The amount of this deduction may not exceed the amount established by Commission Regulation (EU) 1407/2013, of December 18, 2013, on 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 Corporation 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 international production must present the settlement of all eligible expenses in the month of July of the fiscal year after the filming date and request a refund.
- For the application of the deduction, it will be necessary to meet the following requirements:
- That the production obtain the corresponding certificate that certifies 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 with competence in the matter. This requirement will not be required for the application of the deduction to visual effects services.
- That a specific reference to having benefited from the tax incentive be incorporated 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 developed in Spain, as well as, where appropriate, the specific filming locations in Spain and, in the case of animation audiovisual works, the location of the studio that has been commissioned with the production service.
- That the holders of the rights authorize the use of the title of the work and of graphic and audiovisual material from the press that expressly includes specific locations of the filming or any other production process carried out in Spain, to carry 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 powers in matters of culture, tourism and the economy, as well as by the Film Commissions or Film Offices that have intervened in the filming or production.
There are details in the law that are not set out here, so we recommend going to the literality of the Law and Regulations of Corporation Tax and the responses made by the Tax Agency to the binding consultations already made, (some aspects are included in the FAQ section).
It has special conditions to access tax incentives for being an insular and ultra-peripheral territory. Spanish regulations are applied with a series of peculiarities:
- The deduction amounts to 50% of the first million euros and 45% of the excess of said amount, with a maximum of million euros per production.
- For the application of the deduction, it will be necessary to fulfill with the following additional requirements:
• The production must obtain the Canarian audiovisual production certificate
• The production company must be registered in the Canary Islands Film Companies Registry
As a provincial territory with its own taxation, Navarra has its own particular corporate tax regulations that govern the tax benefits applicable in this autonomous community.
It is regulated by the Foral Law 26/2016, of December 28, on Corporation Tax and has the following particularities:La deducción asciende al 35%
• There is a minimum filming time in Navarra
• The producer must be fiscally domiciled in Navarra
• The deduction is limited to 3 million euros
• Procedure: the incentive reaches 35% in a mixed modality of corporate tax refund plus the tax credit. If the tax to be paid is not high enough to cover the total amount of the tax credit, the remaining amount could be deducted from the Income Tax in the following years with a maximum of 15 years.
There are details in the law that are not exposed here, so we recommend going to the literality of the Foral Law 26/2016, of December 28, on Corporation Tax.
Advice and binding consultations
From Spain Film Commission we recommend that the production have the advice of a cabinet specially dedicated to taxation and, if it is specialized in audiovisual productions, it is better.
Binding consultations are written by means of 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 its doubts about the application of the tax incentive. The Tax Agency guarantees that the answer offered is the only possible interpretation of the tax regulation. These binding consultations offer legal certainty to the taxpayer because the provisions of them cannot be contradicted.