With less than a month and a half until the end of the year, taxpayers still have time to adopt a few measures to try to pay as little as possible during the next declaration. To do this, there are various options, such as purchasing a home, starting a business or expanding the family unit.
Many of these deductions belong to the regional level, so each taxpayer should consult regional legislation in search of corresponding benefits. Others, although they are part of the national scope, are less known, which is why, in the same way, it is advisable to consult the regulations before filling out the form.
Among the most unknown, there is a mechanism by which companies and independents up to 120% can be deducted of what they give for corporate tax or personal income tax.
Invest in cultural projects
As indicated in the Corporate tax law (LIS) in his article 39.7taxpayers who decide to finance cultural works, such as feature-length and short films, audiovisual series or performing arts and musical shows, can deduct 120% provided that they sign a financing contract and do not acquire no participation or ownership rights with those who later reap profits. In short, it is a kind of cultural patronage.
“The taxpayer who participates in the financing of Spanish productions of feature films, short films, audiovisual series of fiction, animation or documentaries, or in the production and exhibition of performing arts and musical shows made by other taxpayers, you can apply the deductions […] when it provides sums intended to finance all or part of the production costs, as well as the costs of obtaining copies, advertising and promotion by the producer within the limit of 30% of the production costs, without acquiring rights of intellectual or other property concerning the results of the productions or shows, the property of which must in all cases belong to the producer.
This sponsorship model has been in force in Spain since January 2021 and is inspired by the system that Navarra previously applied to invest in cinema.
To better understand, the Sympathy for the Lawyer (SFTL) firm, specialized in the legal and financial management of music businesses, presents the following example:
“Let’s imagine the case of a company that owns a car dealership and decides to invest in a music festival to improve its tax planning. The company contributes 50,000 euros to the production of the event, which allows it to apply a tax deduction of 60,000 euros. (120% of the investment). You fully recover the 50,000 euros contributed, and also achieve a tax saving or profitability of 10,000 euros. In addition, you can explore other options to promote your support for this cultural project and the positive impact it generates (. . CSR, patronage, etc.)
This measure aims to inject funding into a sector which needs investment to carry out cultural projects. Likewise, it also seeks to give cultural projects great independence from state funding, as well as attract foreign investment.
However, the law sets a ceiling on deductions for the taxpayer who decides to invest in this type of cultural events.
- Generally, the deduction cannot exceed the 50% of the total amount of corporate tax.
- In the event that the amount of the deduction allocated to the investor does not exceed 25% of the total quota, the ceiling of the applicable deduction will be 25%.
- For taxpayers belonging to a tax integration group or whose net turnover exceeds 20 million euros in the 12 months preceding the start of the tax period, the net amount cannot be less than 15% of its tax base.
To benefit from these tax advantages, the investor must sign a financing contract with the selected production, make the financial contribution he deems appropriate, carry out the
