Main changes introduced by the General State Budgets Act for 2017

MAIN CHANGES INTRODUCED BY ACT 3/2017, of 27 June, ON THE NATIONAL GENERAL BUDGET FOR THE YEAR 2017 (Official State Gazette of 28 June)


CORPORATION TAX


Improvement of the deduction for investments in film productions, audiovisual series and live performing arts and music events.

For the tax periods starting from 1 January 2017, the 125th Additional Provision of Act 3/2017 of the National General Budget for the year 2017 (LPGE 2017) modifies article 36, sections 1 and 2 of the Spanish Corporation Tax Act 27/2014. This article regulates the deduction for investments in film productions, audiovisual series and live performing arts and music events, which entered into force for tax periods starting from 1 January 2015.

The 125th Additional Provision of the LPGE introduces the following changes:

  • The percentages of deductions regulated by article 36.1 of the Spanish Corporation Tax Act, applicable to investment in full-length Spanish film productions and fiction, animation or documentary audiovisual series which involve the creation of a physical support before they are mass-produced industrially will be set at:

    1. 25% on the first million of the basis for assessment (20% in 2015 and 2016).

    2. 20% on the excess of the above-mentioned amount (18% in 2015 and 2016).

  • It is added that, in addition to the Instituto de Cinematografía y de las Artes Audiovisuales (Spanish Film and Audiovisuals Institute), the certificate required in article 36.1. a) of the Spanish Corporation Tax Act as a requirement for the deduction, can also be issued by the corresponding authorised body of the Autonomous Community.

  • The limit regulated by article 36.1 of the Spanish Corporation Tax Act is also increased, so that for the periods starting in 2015 and 2016, the total deduction, together with other allowances received by the taxpayer, cannot exceed 50% of the cost of production. With effects for the tax periods started from 1 January 2017, it has been added that this limit will be increased to:

    1. 60% in the case of cross-border productions financed by more than one European Union member state and in which producers from more than one Member state participate.

    2. 70% in the case of the productions directed by one new filmmaker with a production budget of under 1 million euros.

  • There is also an increase in the deduction percentage regulated in article 36.2 of the Spanish Corporation Tax Act, applicable to producers registered with the Registry of Filmmakers of the Ministry of Education, Culture and Sport who are undertaking a full-length foreign motion picture or audiovisual production resulting in the creation of a physical support before they are mass-produced industrially.

    The percentage is set at 20% of the expenses incurred in Spain, provided that they are at least 1 million euros (15% in 2015 and 2016).

  • There is also an increase in the basis of assessment regulated by article 36.2 of the Spanish Corporation Tax Act, which will include the following expenses made in Spanish territory directly relating to the production:

    1. Expenses on creative staff, provided they are tax-registered in Spain or another member State of the European Economic Area, with the limit of 100,000 euros per person (50,000 euros per person in 2015 and 2016).

    2. Expenses deriving from the use of technical industries and other suppliers.

  • The deduction limit regulated by article 36.2 of the Spanish Corporation Tax Act is extended, so that it cannot exceed 3 million euros for each production made (2.5 million euros in 2015 and 2016).


VALUE ADDED TAX


The following new features are introduced in the Value Added Tax Act 37/1992, of 28 December:

Exemptions in internal operations.

Effective as of 29 June 2017 and for an indefinite period, letter j) of article 20.18 of the Act is modified, One. establishing that deliveries of collector coins are exempt from VAT when carried out by their issuer for an amount no higher than their face value.

Reduced tax rates.

Effective as of 29 June 2017 and for an indefinite period, in order to promote access and dissemination of culture, a modification is made to numbers 2 and 6 of article 91. One.2 of the Act, whereby the tax rate applicable to live cultural events is reduced to 10 percent.

Tax rates. Medical equipment, devices and other instruments to which the reduced rate is applicable.

Effective as of 29 June 2017 and for an indefinite period, there is a modification to the first point in section eight of the annex of the Act, changing the VAT percentage applicable to frames for prescription glasses to 10 percent, thereby aligning their tax rate with the rate applicable to glasses and prescription lenses.


GENERAL TAX ISSUES


Legal interest rate and interest on arrears.

The 44th Additional Provision of the 2017 National General Budgets Act regulates the legal interest rate:

  • One. In accordance with article 1 of the Act 24/1984, of 29 June, on modification of the legal interest rate, it is established at 3.00 percent during the prevailing term of this Act.

  • Two. During the same period, the interest on arrears referred to in Article 26.6 of Act 58/2003, of 17 November, the General Taxation Law, will be 3.75 percent.

  • Three. During the same period, the interest on arrears referred to in Article 38.2 of Act 38/2003, of 17 November, the General Subsidies Act, will be 3.75 percent

Spanish Public Multiple-Effect Income Indicator (IPREM).

The 107th Additional Provision of the National General Budgets Act establishes the public multiple-effect income indicator (IPREM):

In accordance with article 2.2 of Royal Decree-Law 3/2004, of 25 June, for the streamlining of the minimum wage regulation and the increase of its sum, the public multiple-effect income indicator (IPREM) shall be as follows during the period in which this law is applicable:

  1. Daily IPREM, 17.93 euros.

  2. Monthly IPREM, 537.84 euros.

  3. Annual IPREM, 6,454.03 euros.

  4. In cases in which the reference to the minimum wage has been replaced by the reference to the IPREM in the application of Royal Decree-Law 3/2004 of 25 June, the annual amount of the IPREM shall be 7,519.59 euros when the corresponding standards refer to the annual minimum wage, except where extraordinary salary instalments are expressly excluded; in this case, the amount will be 6,454.03 euros.

Madrid, 29 June 2017