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V4725-16 8 November 2016 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · bonificación

Subsidies are excluded from the base for the tangible goods production tax relief in the Canary Islands, unless subject to pass-on requirements

A livestock farmer in the Canary Islands requested clarification on whether received subsidies count towards the tax relief under Article 26 of Law 19/1994, if they qualify for the Canary Islands Investment Reserve (RIC), and how to report them in Form 282. The DGT ruled that subsidies do not constitute business income unless there is an obligation to pass them on through prices, while confirming the eligibility of certain investments and the requirement to report them.

The question raised

In relation to the tax relief provided for in Article 26 of Law 19/1994: whether said subsidies received (both or any of them) will form part of the income derived from the sale of tangible goods produced in the Canary Islands for the purpose of applying the tax relief.

The DGT's ruling

Subsidies received for the development of the activity are not considered income derived from the sale of tangible goods, unless there is an obligation to pass on the benefit obtained to the end user. Regarding the RIC, current subsidies are included in net operating income. Investment in photovoltaic panels for self-consumption of renewable energy is considered an eligible investment for the materialization of the RIC. Grants must be declared using form 282 in accordance with current regulations.

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