Producers with tax residence in the Canary Islands that are in charge of a foreign film production are entitled to a 50-45% tax rebate on expenditure in Spain, capped to 18 million Euros (the maximum base of deduction is in 39.8 million Euros. As a requirement, those productions must spend at least 1 millon euros on elegible costs during shooting or 200.000€ on animation, always in Spanish territory.
The Spanish film incentive (1,3, 5 and 6) of a 30% deduction for the first million Euros and 25% from the second million of the expenditure with a limit of 10 million Euros is improved in the Canary Islands thanks to the Canarian Economic and Tax System (2 and 4). This percentage increases 20 points, reaching 50% for the first million Euros, 45% from the second million. It will reach 54% on the first million euros when expenses in the Canaries exceed 1,900,000 Euros.
What type of production qualifies for the allowance?
Foreign productions of feature films or audiovisual works that permit the making of a hardware prior to its industrial production. These productions must obtain the Cultural Certificate
, which requires a minimum of 15 points on this scale (6). They must include in the final credits of the production a specific reference to having benefited from the tax incentive, the collaboration of the film commissions or Government, where applicable, involved in the filming, the specific locations where the film was shot and, in the case of animation, the location of the studio in charge of servicing the production. In addition, they will authorise film commissions and the Government to use the title and audiovisual press material that expressly includes specific filming locations to carry out activities and produce materials to promote Spain for cultural or tourist purposes.(6)
What costs can be included in the tax allowance?
The following expenses made in Spain which are directly connected with the production:
• Expenditure on creative crew, provided they have their tax residence in Spain or in any other European Economic Space Member State.
This is capped at 100,000 euros per person.
• Expenditure on technical industries and other suppliers.
Who can benefit from this allowance?
The production companies or production services companies with tax residence in Canary Islands, registered in ICAA which have been in charge of a foreign feature film or audiovisual work production.
(1) Law 27/2014, 27th November, Corporate Income Tax.
(2) RDL 15/2014, 19th December, ammending the Canary Islands Economic and Fiscal Regime.
(3) Law 3/2017, 27th June, General State Budget.
(4) Law 8/2018, 5th November, ammending the Canary Islands Economic and Fiscal Regime.
(5) Royal Decree-law 26/2018, of 28 December, approving the emergency measures on artistic and film creation.
(6) Redrafted text of Order CUD/582/2020, dated 26 June, establishing the regulatory bases for the state grants for the production of feature films or short films, and regulating the structure of the Registro Administrativo de Empresas Cinematográficas y Audiovisuales (Administrative Register of Film and Audiovisual Companies).