Tax breaks for companies that invest in the Balearic Islands

Automatic summary, not yet reviewed

1. The bill would create an investment reserve: companies that use part of their profits to invest in the Balearic Islands could deduct up to 90 percent of that amount from their taxable base under the Corporate Income Taxincome tax The personal income tax (IRPF in Spain): what people pay on what they earn from work, business or savings. or the Non-Resident Income Tax.
2. The investments would have to be made within three years in assets located in the archipelago, such as fixed assets, job creation, shares in companies or environmental protection, and kept in operation for at least five years (ten for land).
3. Industrial, farming, livestock and fishing companies producing goods in the Balearic Islands would get a 10 percent reduction of their tax bill, rising to 25 percent if they increase their workforce and keep it for three years.
4. Self-employed people using the direct estimate method would get a credit against their personal income tax for profits allocated to the reserve, capped at 80 percent of the tax share corresponding to those profits.
5. Research and development, and technological innovation, tax credits would be 20 percentage points higher than the general regime for activities carried out in the Balearic Islands.
6. The tax benefits would follow EU state aid rules, with accumulation limits, an information return, penalties for non-compliance and an annual monitoring report, plus an effectiveness review in 2028.

Who it affects

• Companies paying Corporate Income Tax that want to invest in the Balearic Islands.: They could reduce their taxable base by allocating profits to the investment reserve.
• Self-employed people under the direct estimate method with activities in the Balearic Islands.: They would get a personal income tax credit for amounts allocated to the reserve.
• Industrial, farming, livestock and fishing companies producing in the archipelago.: They would receive a 10 percent tax reduction, up to 25 percent if they create jobs.
• Companies doing research, development and innovation in the Balearic Islands.: They would enjoy credits 20 points higher than the general ones.

Words worth knowing

Base imponible

The amount of money on which the tax is calculated (taxable base).

Cuota íntegra

The tax amount before credits or reductions are applied.

Estimación directa

A method of calculating actual income and expenses to pay personal income tax, like companies do.

Ayudas de minimis

Small public aid that the European Union allows without prior authorization, up to a capped amount.

Arrendamiento financiero

A lease with an option to buy, also known as leasing.

income tax

The personal income tax (IRPF in Spain): what people pay on what they earn from work, business or savings.

It summarizes the text as it was introduced. It is written by artificial intelligence and may contain mistakes: the official text is what counts. Read the official text · How we make summaries