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V3042-14 5 November 2014 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · bonificación

Film set manufacturing ineligible for REF rebate if classified as decoration services

An audiovisual set construction company has queried whether its activity constitutes the production of tangible goods for the Canary Islands Special Tax Regime (REF). The Directorate-General for Taxes (DGT) ruled that if the activity is provided as a stage decoration service, it is not eligible for the rebate; however, if it is independent industrial manufacturing of elements, it is eligible.

The question raised

Whether the activity carried out by the entity is considered the production of tangible goods for the purposes of the provisions of Article 26 of Law 19/1991.

The DGT's ruling

For the tax relief provided in Article 26 of Law 19/1994, the activity must be industrial, transformative, and not included in the list of exclusions. If the production of elements is carried out as part of a complete staging (scenic decoration), it is classified as a service and is not eligible for relief. However, if the manufacture of tangible elements is carried out independently of the scenic decoration (such as the manufacture of furniture or structures), it is considered an industrial activity and the returns are eligible for relief.

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