World Wide Tax News Issue 55 - June 2020

Measures to mitigate COVID-19 impact on arts, culture and sports

On 5 May 2020, the Spanish Government passed Royal Decree-Law 17/2020 approving urgent measures to assist Spanish artists, the cultural sector, and national sports and athletes. Apart from increasing tax deductions on grants and gifts to non-profit organisations, and publishing the new list of 2020 events of exceptional public interest which benefit from the maximum tax incentives granted by Law 49/2002 of 23 December on non-profit organisations, it significantly increased the tax credit for investments in Spanish cinema and TV productions.

Read more details of Spain’s COVID-19 support measures here.

Boost for the Spanish cinema and TV productions industry

Tax credit for Spanish film productions

With effect from 1 January 2020, the tax credit for Spanish source cinema and TV productions will be increased by 5%.

This measure increases the tax credit to 30% (from 25%) for the first EUR 1 Million of production costs. The excess will benefit from a tax credit of 25% (previously 20%). In addition, the maximum amount of the tax credit is increased to EUR 10 Million (from EUR 3 Million). However, as certain productions usually also benefit from subsidies and grants, there is a general limit which states that the tax credit together with other subsidies and grants received may not exceed 50% of the total production costs (or 60% of the total production costs in the case of international productions that are financed by another EU Member State).

Notwithstanding these existing limits, the Government has increased the amount of production costs that may benefit from the tax credit in connection with certain productions that the Government especially wants to promote, which are as follows:

Production type

Limit on the production costs

Short movies


Novel Directors: Persons who have not directed or co-directed more than two motion pictures and whose production budget does not exceed EUR 1,500,000


Films that have been entirely shot in co-official languages other than Castellano and that are projected in Spain in that language or with subtitles


Films that have been directed by persons with a degree of disability of 33% or more


Films entirely produced by women


Films with special cultural or artistic value, which need an exceptional subsidy based on criteria to be determined by ministerial decree or specific aid scheme




Animation films whose Budget does not exceed EUR 2,500,000


International co-productions with Latin-American countries



Tax credit for international film productions

The Corporate Income Tax Law also provides a tax credit for foreign film productions that have a nexus with Spain. The Royal Decree-Law increases the tax credits granted to such productions and equalises them with those applicable to Spanish productions, although with certain specialties.

In this regard, a tax credit of up to 30% is granted on the first EUR 1 Million in production costs. The excess will benefit from a tax credit of 25% (previously the deduction was limited to 20% of the whole amount of production costs).

The tax credit will apply as long as the production costs incurred in Spain amount to at least EUR 1 Million, except for pre- and post-production costs regarding animation films, or visual effects produced in Spain, where the minimum cost to be incurred in Spain is reduced to EUR 200,000.

International film productions may therefore also benefit from a maximum tax credit of up to EUR 10 Million (before EUR 3M). The general limit applicable to the combined use of this tax credit and other subsidies and grants is also maintained at 50% of total production costs.

Increased tax credit for films produced in the territory of the Canary Islands

Special reference must be made to the impact this increase of the deduction rates has on the tax credit for film productions that are in total or in part produced in the territory of the Canary Islands.

The law on the Special Economic and Tax Regime applicable to the Canary Islands grants, in general, an increase of 80% on the tax credits granted to productions made in the rest of Spain, with a limit of 20%. This means that if a foreign producer produces a film wholly or partly in the Canary Islands, with a minimum investment incurred in such territory or in Spain and meeting certain other requirements, it may benefit from a tax credit or rebate of 50% on the first EUR 1 Million of production costs and 45% on the excess.

This incentive converts the Canary Islands to one of the top territories in the world in which to produce international films, including the major Hollywood productions. The Canary Islands film industry is currently also trying to extend this increase to the maximum amount of tax credit to be granted, which has now been set at EUR 10 Million, and which should be increased to EUR 18 Million in the case of foreign film productions carried out in Spain if the costs have been incurred in the Canary Islands, in line with the law that rules the Economic and Tax Regime applicable to the Canary Islands.

Eugenio Garcia

Belen Delgado