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Sustainable Economy Preliminary Bill Approved by the Spanish Government

28 Jan 2010

Last November the Council of Ministers approved the Sustainable Economy Preliminary Bill, as part of the strategy to change Spain's economic model with a view to making the economy more competitive and stronger. Taxand Spain discuss how this bill will benefit corporates.

The Government has seized the opportunity with this Preliminary Bill to include certain proposed tax reforms, including most notably the following:

R&D&I tax credit to be enhanced
The corporate income tax credit rate for technological innovation activities would be increased from 8% to 12%, as would the ceiling on the tax credit, which would go up from the current 50% to 60% of the reduced gross tax payable in cases where the amount invested in R&D&I were material (i.e., where this exceeded 10% of the gross tax payable for the year).

These proposed measures would be effective for years commencing on or after the date on which the draft legislation enters the statute books.

Last April the Spanish Parliament voted to maintain the R&D&I tax credit indefinitely.

Environmental tax credit to be maintained
The Preliminary Bill proposes to maintain indefinitely the environmental tax credit for corporate income tax purposes, which was initially scheduled to disappear in 2011. In addition, the tax credit would include investments to prevent noise pollution and the rate would go up from 4% to 8%.

Taxand's Take

Obviously this is very good news for Spanish-resident companies that invest in R&D&I and environmental projects.

Your Taxand contacts for further queries are:
Vicente Bootello
T. +34 91 514 52 00

Jos? Ignacio Ripoll
T. +34 91 514 5200

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