Culture with Benefits: How Tax Deductions for Patronage Work in Spain
Contributions or donations to entities and institutions provided for in Law 49/2002 that are destined to the realization and development of priority patronage activities and programs will be entitled to a deduction. Since 2002, this law has been in place to encourage the private sector to collaborate economically with certain activities. These donations must be directed only to non-profit entities or groups that carry out activities considered to be of general interest, such as film productions or musical shows.
The law, in fact, is divided into three points according to the activity that is considered to be the beneficiary.
1. Deduction for investments in Spanish film productions and audiovisual series.
From January 1, 2021, the financiers of these activities may apply a deduction of up to 30% for the first million of the deduction base, and 25% for the excess amount. This financier may not assume a cost exceeding 30 % of the total costs, nor may it acquire intellectual property of the production results, i.e., it must be dissociated from the company.
At the same time, the producers themselves are also entitled to benefit from this deduction, the producer being understood as the person with initiative, responsibility or ownership of the production rights. The maximum amount of deduction for them may not exceed 20 million euros in total, or 10 million euros for each episode produced.
2. Deduction for foreign film productions in Spain.
Production companies registered in the corresponding registry that are in charge of the execution of a foreign production of feature films or audiovisual works will be entitled to a deduction only for the expenses incurred in Spanish territory and will only generate this right if they exceed 2 million euros in costs. As in the previous case, the deductible amount will be, in general, 30% for the first million and 25% for the rest. Expenses in Spanish territory must be at least 1 million euros (except in the case of animations, where it will be 200,000 euros). The maximum amounts are the same as in the previous case.
As a curiosity, the credit titles must include a specific reference to the fact of having availed of the fiscal incentive, as well as to the different institutions that have been involved: central government, autonomous communities, etc. Likewise, the administration reserves the right to use explicit images of places in Spanish territory that appear in the film for cultural or tourist purposes, as long as it is not a feature film.
3. Deduction for the production of certain live shows.
Considering the same requirements of the maximum assumable cost on the part of the financier and its dissociation in terms of ownership, the deduction percentage will be 20%, and the maximum amount allowed will be the result of multiplying 1.20 by the amount of the amounts contributed. For the producer, the maximum deductible amount per taxpayer is 500,000 euros.
In addition, the production must have a special certificate from the “Instituto Nacional de las Artes Escénicas y de la Música” and allocate at least 50 % of the profits obtained to reinvestment in the activity itself, either in the same fiscal year or during the 4 years following its closing.
It is not in exchange for anything for these associations or non-profit entities; therefore, they must meet certain additional transparency requirements, such as the presentation of their annual accounts. Whether you want to be a patron of culture and get fiscal advantages, or if you have doubts about what kind of deduction you can access as a producer, do not hesitate to contact us, #bettercallmonday.