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V0781-14 21 March 2014 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · deducción por inversión

The limit on tax credits for investment in fixed assets in the Canary Islands applies to the entity's total tax liability

A company with permanent establishments in the Canary Islands has requested clarification on whether the limit for tax credits regarding investment in new fixed assets is calculated based on the company's total tax liability or on a theoretical Canary Islands tax liability. The Directorate General for Taxes (DGT) has ruled that the limit applies to the entity's total tax liability.

The question raised

Question raised 1. Whether the limit in the application of the deduction for investments in new fixed assets in the Canary Islands is determined based on the company's tax liability or on the theoretical tax liability obtained in the Canary Islands.

The DGT's ruling

The specific limit of 50% for the deduction for investment in new fixed assets in the Canary Islands applies to the entity's tax liability, pursuant to Article 29 of the TRLIS, and not to a theoretical tax liability calculated based on income from the Canary Islands. In the case of tax groups, pending deductions are deducted from the group's tax liability subject to the limit that would have applied to the company under the individual regime.

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