Main new features introduced by Royal Decree-Law 26/2018, of 28 December, approving urgent measures on artistic creation and the film industry

CORPORATION TAX

Modification in the Deduction for investments in film productions, audiovisual series and live performing arts and music events.

Effective as of 5 July 2018, article the third of the Royal Decree-Law 26/2018, of 28 December (RD-Law 26/2018) modifies article 36.2 Act 27/2014, of 27 November, of Corporation Tax (Spanish Corporation Tax Act). 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.

Article the third of RD-Law 26/2018 repeals the obligations imposed on producers, introduced in article 69 of Act 6/2018, of 3 July, of General State Budgets for 2018, considering that this could have negative consequences on film projects underway in Spain.

Nonetheless, the specification “the regulations and obligations required to be eligible for this deduction can be legally established” has been added to article 36.2 in the Spanish Corporation Tax Act, with the aim that, by modifying the Regulations, the obligations considered required by producers who take advantage of this tax incentive are established, and are proportional and in accordance with the purpose of the incentive.

PERSONAL INCOME TAX

Modification of the withholding tax rate applicable to capital gains from intellectual property when the taxpayer is not the author.

Effective as of 1 January 2019, the percentage of withholding for capital gains from investment income from intellectual property when the taxpayer is not the author will be 15 per cent.

This percentage will be reduced by 60 per cent in cases of income with the right to deduction established in article 68.4 of the Personal Income Tax Act for income obtained in Ceuta or Melilla.

VALUE ADDED TAX

Addition of a new number 13th in article 91. One.2 of the Value Added Tax Act, through which the reduced rate is applied to services rendered by performers, artists, directors and technicians that are individuals, to the producers of motion pictures to be exhibited in theatres and to the organisers of plays and musicals.

Madrid, 2 January 2019.