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V2749-20 9 September 2020 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · deducción por inversiones en Canarias

Canary Islands investment tax relief does not apply if the vehicle is susceptible to use by related parties

A Canary Islands company has requested clarification on whether the purchase of a 4x4 vehicle and its maintenance costs qualify for Canary Islands investment tax relief and Corporate Tax deductions. The Directorate General for Taxes (DGT) has ruled that the investment deduction is not applicable if the vehicle can be used by persons related to the company.

The question raised

Whether the acquisition of a vehicle with these characteristics can be considered a new fixed asset for the purposes of the Canary Islands investment deduction and whether its maintenance expenses (diesel, repairs, insurance, etc.) would likewise be deductible for Corporate Income Tax purposes.

The DGT's ruling

For the investment deduction in the Canary Islands, external transport vehicles are not considered new fixed assets if they are susceptible to use by persons related to the entity. Regarding Corporate Income Tax, maintenance expenses shall be deductible provided they are used exclusively for the activity and comply with the requirements of accounting registration, accrual, correlation with income, and documentary justification.

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