Companies that make “eligible investments” in the interior of the country will be able to benefit from a 20% increase to the IRC maximum deduction, according to the proposed state budget law for 2019 (OE2019), released today.
In the scope of the tax benefits applicable to the interior territories, to companies that directly and principally carry out an economic activity of an agricultural, commercial, industrial or service nature in inland territories, which are qualified as micro, small or medium-sized enterprise, “an increase of 20% shall be applied to the maximum deduction provided for” in the Investment Tax Code “when eligible investments made in inland territories are concerned.”
According to the Investment Tax Code, business owners may deduct from the collection of the Corporate Income Tax (IRC) “up to 10% of retained earnings that are reinvested in relevant applications” within two years from end of the tax period to which retained earnings correspond.
Established by an ordinance of the members of the Government responsible for the areas of finance, local authorities and planning and infrastructures, the delimitation of the beneficiary territorial areas “complies with criteria such as emigration and aging, economic activity and employment, entrepreneurship and infrastructure of the territory “.
In the OE2019 law proposal, the Government reiterated that the envisaged tax benefit “is subject to the applicable European rules on de minimis aid, and the amount of the benefit can not exceed the de minimis threshold”.
Currently, the tax benefits related to the installation of companies in the interior territories determine the application of an IRC rate of 12.5% to the first 15,000 euros of taxable income, in accordance with the Tax Benefits Statute.
In order to enjoy tax benefits, companies have to “exercise the activity and have effective management in the beneficiary areas” and can not have salaries in arrears.
“The company does not result from a spin-off made in the two years prior to the benefits, and the determination of the taxable profit is made using direct valuation methods or under the simplified regime of determination of the taxable amount” are other conditions to access support.
According to the law, the tax benefit provided “is not cumulative with other benefits of the same nature, not harming the option for a more favorable one.”
In addition to companies, students attending educational establishments in the interior of the country will be able to deduct up to € 1,000 from the Individual Income Tax (IRS) collection, 200 euros more than the current situation, according to OE2019 proposal .
“In the case of students attending educational establishments situated in the interior of the country … an increase of 10 percentage points shall be applied to the value of education and training expenses referred to in Article 1 (1). Article 78d of the IRS Code, the overall limit established therein being raised to € 1,000 when the difference relates to these expenses, “reads the document.
Article 78 of the IRS Code sets 800 euros as the ceiling for education and training expenses.
The novelty appears in the chapter on tax benefits, in article 41 B, which refers to “tax benefits related to the installation of companies in inland territories”.