Encourage entrepreneurs to invest, at a time marked by the effects of the COVID-19 pandemic. This is the main purpose of the Extraordinary Tax Credit for Investment II (CFEI II), introduced in the Supplementary State Budget for 2020.
It is, more specifically, a tax benefit that allows a deduction from the collection of IRC of 20% of the costs of investing in assets related to the exploration (provided that they are carried out between 1 July 2020 and 30 June of the following year) .
However, and unlike other investment support measures, CFEI II is characterized by being a tax benefit open to the most diverse sectors of activity, whose application does not imply the creation of new jobs.
Conditions for obtaining support
This tool is available to companies that, primarily, are dedicated to activities of a commercial, industrial or agricultural nature. It is necessary, however, that:
- Beneficiaries are subject to IRC and have organized accounting;
- Taxable profit is not determined by indirect methods;
- There are no debts to the tax authorities;
- Over the next three years, it is possible to terminate employment contracts.
It should be noted that, for the purposes of the aforementioned 20% discount on the IRC, the maximum amount of recognized investment expenses is five million euros per taxable person.
On the other hand, the deduction will be applied in the settlement of IRC corresponding to the tax period starting in 2020 or 2021 until the concurrence of 70% of the collection of this tax, depending on the relevant dates of the investments that are eligible.
However, the amount that is not eligible for deduction may still be, under the same rules, in the next five tax periods.
What kind of expenses are eligible?
According to the CFEI II regulation, all investment expenses in assets related to exploration are considered eligible, provided that companies undertake to hold them for a minimum of five years (or during their minimum useful life) and is related to:
- Tangible fixed assets;
- Non-consumable biological assets,
- Intangible assets subject to depreciation (for example: expenses with development projects and registration of patents, trademarks, permits, etc.);
- Additions to ongoing investments, if they correspond to asset additions (although transfers of ongoing investments are not eligible).
With regard to tangible and biological assets, it should be noted that they will only be considered when acquired in a new state and the date of their entry into service is up to the end of the tax period beginning on (or after) 1st January 2021.
In spite of this, charges for assets susceptible to personal use will not be eligible, such as light vehicles and other means of transport (with some exceptions), decorative items / furniture and works for construction, expansion or repair of buildings (the not be associated with productive or administrative activities).
Also outside CFEI II are the expenses associated with the acquisition of land (which are not recognized as assets in a new state). It should also be remembered that this benefit cannot be combined with any other of the same nature that are provided for in other legal instruments.