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V0189-20 28 January 2020 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · deducción por espectáculos

Live performance tax deduction applicable only if production risk is assumed

An audiovisual production company has enquired whether it can apply the tax deduction under Article 36.3 of the Corporate Income Tax Act for expenditure on live performances. The Directorate General for Taxes (DGT) has ruled that this is only possible if the company assumes the risk and venture of both production and exhibition, thereby excluding subcontracting or the mere rental of auditoriums.

The question raised

1. Whether the consultant can apply the deduction provided for in Article 36.3 of Law 27/2014, of November 27, on Corporate Income Tax (LIS, hereinafter), for expenses incurred in the production and exhibition of live performing arts and musical shows, in relation to the shows and activities described.

The DGT's ruling

The 20% deduction for live performance expenses requires that the taxpayer assumes the risk and venture of the activity. Obtaining the certificate from the National Institute of Performing Arts and Music is necessary to apply the deduction, even if the expenses are incurred in a fiscal year different from that of its application. The profits to be reinvested must be the income directly related to said activities, and the reinvestment requirement is not enforceable if the results are negative.

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