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V1333-14 19 May 2014 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · deducción por inversiones

Investment deduction limit in Canary Islands applies to group's full share

A company asked whether the investment deduction limit in Canary Islands should apply to the permanent establishment's income or to the group's full share. The DGT confirms that the limit applies to the group's full share.

The question raised

Whether for the application of the deduction for investments in fixed assets in the Canary Islands, both in the tax consolidation regime and in the individual regime, the only applicable limit is the total tax liability reduced by the amount of double taxation relief and, where applicable, the allowances provided for by Law, or whether account must be taken of the income obtained by the permanent establishment located in the Canary Islands.

The DGT's ruling

The limit for the deduction for investments in fixed assets in the Canary Islands (50% of the total tax liability reduced by double taxation relief and tax allowances) applies to the entity's total tax liability. In the tax consolidation regime, as the group is the taxpayer, the limit applies to the total tax liability of the tax group. It does not apply to a theoretical tax liability calculated based on income obtained in the Canary Islands territory.

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