To optimize the 2023 tax closing can be done in the few days left of the year, following a series of recommendations, some of which we have already included in a previous article.
In this particular article we are going to tell one more alternative.
We are talking about the deduction for financing film productions, audiovisual series and live shows of performing arts and music.
Deduction to optimize the tax closing of 2023
Article 36 of the Corporate Income Tax Law regulates the tax deduction for expenses incurred in film productions, audiovisual series and production and exhibition of live shows of performing and musical arts.
Specifically, a guaranteed return of 20% of the amount invested can be obtained by law.
Deduction for investments in cinematographic productions, audiovisual series and live shows of scenic and musical arts
In principle, the right to the tax deduction corresponds to the producers who carry out cinematographic productions and audiovisual series. And also to those who carry out the production and exhibition of certain live shows of scenic and musical arts.
How to take advantage of this deduction without being a producer?
From the year 2021 companies and also self-employed can benefit from these deductions without the need to be related to the production activity. As long as they have economic activity.
Article 39.7 of the Corporate Income Tax Law provides that companies and freelancers with economic activity sign a financing contract with the producer. Whether of the cinematographic work, series or live show.
Making an economic contribution to finance the same and obtaining in exchange the transmission by the producer of the tax deduction generated by the production. In this case in the amount of 120% of the amount contributed for the financing.
In this way, the financing of the production, which can be carried out at any stage of the production, implies the realization of an investment with a gross return guaranteed by law of 20%. This is achieved by obtaining a tax deduction equivalent to the amount contributed plus an additional 20%.
It does not involve acquiring any rights or obligations with respect to production other than transferring the agreed amount.
What requirements must be fulfilled to optimize the 2023 tax closing?
The only requirement to be fulfilled will be the sending by the financier to the Tax Agency before the closing of the fiscal year of a communication signed by the producer and financier. Together with a copy of the financing contract and the certification issued by the public bodies provided for in the regulations of compliance with the requirements necessary for the deduction, which will be provided by the producer.
However, given that the deduction to be applied cannot exceed in the fiscal year 50% of the total amount of Personal Income Tax or Corporate Income Tax minus the deductions for international double taxation and applicable allowances.
It will be very convenient to make a detailed calculation of the maximum amounts to invest through this financing in order to be able to take advantage of the total deduction generated in the fiscal year itself.
As we have said before, this option is open as a general rule for companies and self-employed with economic activity. But those with a taxable base of at least €100,000 in the year. And of course, with enough cash to face the investment.
When will we obtain the profitability of this deduction?
This attractive profitability guaranteed by law is obtained in a very short term, since the contributions for the financing of the production will be made at the end of the fiscal year 2023 and the profitability will be materialized in a lower tax payment.
For individuals, this profitability will become effective when filing their next income tax return.
While for companies it will be effective when filing their Corporate Income Tax, which as a general rule will be done in July 2024.
Therefore, the high profitability, the legal guarantee of the same and its short term make this possibility the best existing investment for companies and self-employed.