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V2873-14 24 October 2014 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · reserva para inversiones en canarias

Subscription of shares in a new company does not constitute initial investment for the RIC

A Canarian company has enquired whether subscribing to capital in a new company constitutes an initial investment for the Canary Islands Investment Reserve (RIC). The Directorate General for Taxes (DGT) has ruled that shares are financial instruments rather than fixed assets, although the investment could potentially qualify under point D if the investee company makes the appropriate investments and the assets are used exclusively in the Canary Islands.

The question raised

1. Whether the incorporation of the distributing entity can be considered an initial investment in accordance with the provisions of Article 27.4.A of Law 19/1994.

The DGT's ruling

Investment in shares is not suitable as an initial investment (letter A) because they are financial instruments and not tangible or intangible fixed assets. For the subscription of shares to be valid under letter D, the invested company must make investments in fixed assets and these must be used exclusively in the Canary Islands archipelago. In this case, as the rights are distributed outside the Canary Islands, the territoriality requirements are not met.

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