Limitation on the deduction for film investments in Personal Income Tax

The Dirección General de Tributos (DGT) has issued a relevant ruling regarding the application of tax incentives aimed at the audiovisual sector for individuals. The inquiry focuses on determining whether an employee, who does not carry out any own economic activity, is entitled to apply the deduction for investments in film productions.

What the DGT has ruled

The resolution establishes that the deduction provided for in Article 36 of the Corporate Tax Law (LIS) is not generally applicable to any taxpayer under Personal Income Tax (IRPF). For a taxpayer to benefit from this deduction, they must meet the requirements established in Article 68.2.a) of the Personal Income Tax Law (LIRPF).

Specifically, the regulations require the beneficiary to carry out economic activities. Therefore, an employee who does not have their own economic activity does not meet the necessary requirement to apply this tax incentive in their income tax return.

What it means for you

This criterion clearly delimits the scope of tax incentives originally designed for Corporate Tax when they are transferred to the scope of IRPF. If you are an individual receiving income from employment but do not carry out a business or professional activity, you will not be able to use investment in film productions as a way to reduce your taxable base.

The distinction between the type of income and the existence of an economic activity is fundamental to avoid errors in the tax settlement and possible requests for information by the Tax Administration.

What you should do

It is necessary to verify the nature of your income and whether you meet the economic activity requirements demanded by the LIRPF before attempting to apply deductions of this type. Each tax situation is unique, so it is recommended to analyze your taxpayer profile to ensure that the use of tax incentives strictly complies with current regulations.