Tax deductions for R&D&I constitute one of the main instruments of incentive for research and development (R&D) and technological innovation (IT) in Spain. However, many companies find it difficult to determine whether their projects should be categorized as R&D or as technological innovation. The classification as R&D or IT is not merely a technical distinction, but has a direct impact on the percentage of deduction applicable in Corporate Income Tax, so correctly classifying a project is essential to maximize the available tax incentives. In this article we explain the difference between research and development and technological innovation, the role of the state of the art in this assessment, and how this classification affects R&D&I tax deductions. https://www.youtube.com/watch?v=ZE2ItGGVi6M&t=1s ¿Qué se considera investigación y desarrollo (I+D)? Research and development projects aim to generate new knowledge or technological developments that represent a significant breakthrough or advance compared to the existing state of the art at a global level. This type of project is characterized by two key features: High degree of technical uncertainty and relevant technical risk. In other words, these are initiatives where there is no known or obvious solution at the time the project starts, so the company must develop new technical solutions not available on the market, representing an objective novelty. This disruptive nature is what justifies the tax regulations establishing higher deduction percentages for R&D projects within the tax incentives for innovation. What is technological innovation (IT)? Technological innovation (IT), on the other hand, does not necessarily imply the creation of completely new technology. In these cases, the projects seek to introduce substantial improvements to existing products or processes in the company, generating a significant technical advance for the company, even though the technologies used may already exist in the market or in the sector, hence they represent a subjective novelty. Therefore, technological innovation is characterized by: Applying existing technologies in a novel way within the company; Introducing relevant improvements in processes or products; Generating technical advances for the organization, even if they are not entirely new in the sector. From a tax perspective, these projects can also benefit from R&D&I tax deductions, although with different deduction percentages than those for research and development. The role of the state of the art in the qualification of projects One of the fundamental elements to determine whether a project corresponds to R&D or IT is the analysis of the state of the art. The state of the art consists of studying the existing technical knowledge in a given field before starting a project. Its objective is to identify: What technological solutions already exist; What level of development the sector has reached; Whether the project proposes a truly novel advance. Thanks to this analysis, it is possible to determine if the project: Introduces a completely new development (R&D) or represents a relevant improvement on existing technologies (IT). Consequently, the state of the art becomes a key tool to technically justify the nature of the project and its fit within the R&D&I tax deductions. What happens if the project does not achieve the expected results? A common question among companies is whether the failure of a project prevents them from applying for R&D tax deductions. The answer is clear: not necessarily. What is relevant for classifying a project as research and development or technological innovation is not the final result, but the process of seeking a real technical advance. Therefore, to defend the project's classification regardless of the final result, it is imperative that the company can demonstrate: The activities carried out during the project; The methodology applied; The technical documentation generated; The justification of the technological challenge addressed. Therefore, even when the project does not achieve the expected result, it can still be considered R&D or technological innovation if the development effort undertaken is adequately demonstrated. Why it is essential to differentiate between R&D and technological innovation. Correctly determining whether a project is R&D or technological innovation (IT) is key because this classification directly affects the applicable tax deduction percentage. Within the framework of R&D&I tax deductions, Spanish regulations establish different incentives depending on the nature of the project. Deduction percentage for technological innovation (IT) Technological innovation projects can benefit from a deduction of: 12% on expenses incurred during the tax period in common territory, 15% in the chartered areas and 45% in the Canary Islands. Percentage of deduction in research and development (R&D) Research and development projects have higher tax incentives: In the common territory: 25% deduction on the expenses of the year 42% deduction on the excess expenses that exceed the average of the two previous years In the case of the chartered areas, the deduction percentages range between 30 and 50% of the eligible expenses, and in the Canary Islands between 45 and 75,6%. This difference reflects the greater technological risk and the greater degree of uncertainty associated with research and development. Keys to Properly Leveraging R&D&I Tax Credits To correctly apply R&D&I tax credits, companies must pay special attention to several aspects: Properly analyze the state of the art before starting the project Identify whether the development corresponds to R&D or technological innovation Adequately document all technical activities carried out Justify the technical progress achieved during the project Correct classification and documentation allows for reducing tax risks and optimizing the use of innovation incentives available in the Spanish tax system. Frequently asked questions about R&D tax deductions: What is the difference between research and development and technological innovation? Research and development seeks to generate entirely new technologies or knowledge, while technological innovation (IT) introduces substantial improvements to existing technologies or processes. Can a tax deduction be applied if the project is unsuccessful? Yes. The success of ...Read more

Recently, the General Treasury of Social Security published News Bulletin RED 07/2026, which includes relevant clarifications on the application of bonuses in Social Security contributions for research personnel. The specific system for these bonuses is regulated in Royal Decree 475/2014, of June 13, on bonuses in the Social Security contribution of research personnel. Subsequently, Royal Decree-Law 1/2023, of January 10, introduced relevant modifications to this regime and established a new framework applicable to incentives for employment contracts. Key changes in the application of Social Security bonuses The new bulletin maintains the general framework of the incentive and provides greater operational clarity on how these situations should be identified in the area of ​​affiliation of the General Treasury of Social Security. In practice, this clarification reinforces the security in the application of the bonus, by specifying how certain data should be communicated to avoid formal incidents. How to identify research staff receiving bonuses: value 9916 and contract codes The General Treasury of Social Security reminds that registration situations to which the bonus applies must be identified by the value 9916 in the field “Special Employment Relationship”. Likewise, this value must be linked to certain types of contracts in the General Treasury of Social Security, even when the code does not exactly match the contract formalized and communicated to the State Public Employment Service. This clarification is especially relevant, since the bulletin establishes an equivalence between the contract codes communicated to the State Public Employment Service and the codes that must be recorded in the General Treasury of Social Security in order to correctly apply the measure. In this way, the General Treasury of Social Security specifies which code should be used for the purposes of the bonus when the code communicated to the State Public Employment Service is different. Application of the bonus to workers who are already registered Another of the most relevant issues of the bulletin is the possibility of starting the application of the bonus with respect to workers who are already registered in the company, when during the initial registration period the bonuses were not yet applicable. In these cases, the worker must initially be listed without a Special Employment Relationship. When the bonus becomes applicable, the cancellation of the previous period and a new registration with the value 9916 must be processed. Therefore, the bulletin confirms a relevant operational criterion: there can be an initial registration period without bonus and without a Special Employment Relationship and, subsequently, when the requirements to apply the incentive are met, the bonus situation can begin through a new registration with a Special Employment Relationship 9916. This clarification is especially useful for those cases in which, since the modification introduced by Royal Decree-Law 1/2023, the bonus for certain workers has not started because it has not been applied from the time of their initial registration. To the extent that these workers currently meet the required requirements, the bulletin allows the situation to be sorted by deregistering the period without a Special Employment Relationship and registering a new one with a Special Employment Relationship 9916. Periods of non-bonus research staff: use of value 9938 The bulletin also regulates the use of value 9938, identified as “Research, Development and Innovation Non-Bonus Research Staff”. This code should be used when, during a high-level situation in which the bonus situation with the value 9916 has already started, there is a period in which it is not appropriate to apply the incentive. Consequently, the value 9938 allows the identification of non-bonus periods once the worker has already correctly entered the circuit of subsidized research personnel. Why this update is relevant for companies In summary, this update provides greater security in the administrative management of these bonuses, especially in five aspects: correct identification of the research staff receiving the bonus through the value 9916; equivalence between contract codes of the State Public Employment Service and contract codes of the General Treasury of the Social Security; possibility of initiating the bonus for workers who are already registered, when it is not yet applicable in the initial period; operational procedure to initiate said bonus by deregistering the period without a Special Employment Relationship and registering a new one with a Special Employment Relationship 9916; treatment of periods in which the worker is research staff, but the bonus is not applicable, through the value 9938. For companies that develop R&D&I projects, these clarifications represent an opportunity to review both the situations currently receiving subsidies and those research workers who, already registered, may now meet the requirements to apply for the incentive. It is also advisable to check if there are employees who meet the required conditions and who are not yet being included in the bonus scheme. This update provides greater security in the application of the incentive and allows for more precise review to ensure that registrations, variations, and bonus periods are correctly reported to the General Treasury of Social Security. Having a prior review of the employment, technical and documentary situation facilitates this process, reduces risks in communications and helps to take advantage of the incentive with greater guarantees. In a context where investment in innovation requires planning and control, proper management of these bonuses can help optimize costs and strengthen the company's research funding strategy.   José Miguel Sanabria, Consultant in the Legal area, Innovation Financing, at Elzaburu

CONTEXT A technology company with constant and highly specialized innovative activity Virtual Cable is a Spanish technology company specializing in the development of secure solutions for the digital transformation of the workplace. Through its own UDS Enterprise platform, the company develops virtual desktop infrastructure (VDI) solutions fully adapted to the needs of each user.   Its commitment to personalization, flexibility, and constant adaptation to new technological environments has led the company to maintain an intensive level of innovation. Through the evolution of UDS Enterprise, Virtual Cable has incorporated developments related to desktop virtualization, integration with cloud, hybrid and multicloud environments, compatibility with new service providers, improved connectivity protocols, multi-factor authentication, advanced security mechanisms and optimizations of performance, scalability and user experience. All of this has allowed the platform to continue adapting to increasingly complex infrastructures and the specific needs of different user profiles. It was precisely this dynamic of recurring technological evolution of its platform, supported by functional, architectural and security developments beyond ordinary software maintenance, that made it necessary to analyze what part of this activity could benefit from the tax incentives linked to technological innovation. TECHNICAL APPROACH Identifying and correctly structuring innovative activity The work began with several sessions with the Virtual Cable technical and management team to understand the technological developments that were being carried out internally. From there, a thorough technical and tax analysis was carried out on the various projects and evolutions developed by the company, with the aim of identifying which developments could benefit from the tax incentives provided for R&D&I projects, differentiating them from those ordinary tasks of maintenance, support, correction or minor adaptation of the software. One of the key points was to assess whether these developments should be considered as R&D projects or as technological innovation. After reviewing the scope of the work and the degree of improvement incorporated, it was determined that the most appropriate way was to structure them as technological innovation projects. Based on that rating, the economic analysis work began: identifying which costs were linked to the projects and could form part of the basis for the deduction. To achieve this, it was necessary to work in a coordinated manner with the company's technical and financial teams, reviewing the personnel involved, dedications, external collaborations, and other expenses necessary for the execution of the developments. With all this information, the necessary technical and economic basis was structured so that Virtual Cable could apply, in its Corporate Income Tax, the tax deductions corresponding to its technological innovation activities, whose regulation and application are included in article 35.2 of the Corporate Income Tax Law. In parallel, work was also done on the certification of Virtual Cable as an innovative company based on the AENOR EA0047 specification, which establishes that certain indicators must be met, distributed in the areas of human resources, economic-financial resources, way of innovating, organization of the results of the process or generation of employment in R&D&I. In the case of Virtual Cable, this recognition allows for the institutional reinforcement of the company's innovative character and provides coherence to the incentive strategy linked to its recurring technological activity. RESULT An incentive structure aligned with the company's innovative capacity As a result of the project, Virtual Cable was able to apply tax deductions corresponding to 12% of the expenses classified as technological innovation, under the terms provided for this type of activity in the Corporate Income Tax Law, thus optimizing the resources invested in the development and continuous evolution of its platform. Obtaining this certification also represented official recognition of Virtual Cable's innovative capacity and the technological work that the company has been continuously developing for years, reinforcing its position within the national innovation ecosystem and facilitating a better articulation of the various public instruments supporting R&D&I. Furthermore, the project enabled the company to establish an internal methodology to identify, document, and structure future technological developments from a dual technical and economic perspective. In this way, the company was able not only to optimize the tax implications of the investment already made, but also to lay the foundations for managing its future lines of innovation in a more organized way. José Miguel Sanabria, R&D consultant José Miguel Sanabria, consultant in the Innovation Financing area of ​​ELZABURU, has led the project of analysis and structuring of the tax incentives applied by Virtual Cable. Specializing in innovation financing, José Miguel regularly participates in projects related to the identification, analysis and technical defense of innovative developments, assisting companies in both the application of tax deductions and in obtaining certifications and accreditations linked to innovation.

R&D has established itself as one of the main drivers of business competitiveness, sustainable growth and technological leadership. In an increasingly demanding European context, investment in research and development not only drives innovation, but also strengthens the visibility and relative position of companies in international rankings. In this context, the Spain R&D Ranking 2025, prepared by the Joint Research Centre (JRC) of the European Commission, offers a clear picture of the role played by the most R&D-intensive Spanish companies. The weight of Spanish R&D in the European ranking Spain has managed to place 26 companies in the ranking of the 800 European companies that invest the most in R&D, representing 3,3% of the total. This presence reflects the strength of the Spanish business fabric in terms of innovation, with a particularly significant participation in strategic sectors such as banking, energy, technology, health and industry. Spanish companies in the European Top 100 Within this context, six Spanish companies stand out for their position in the European Top 100 in R&D investment: Santander (29th place) Amadeus (41st) Telefónica (60th) Grifols (89th) Iberdrola (91st) Indra (93rd) These companies not only lead the national scene, but also reinforce the international projection of Spanish R&D. In particular, the first five are also among the 2.000 companies worldwide that invest the most in R&D, representing 0,25% of the world total. The entry of Inditex and the positive evolution of the ranking A notable milestone in the most recent edition of the ranking is the entry of Inditex, which joins as the seventh best positioned Spanish company, reaching position 103. This entry is particularly significant, as it concerns a company traditionally associated with business models intensive in design, logistics and digitization rather than R&D in the classic sense. Its incorporation demonstrates a broadening of the concept of business R&D, increasingly linked to technological processes, data analytics and digital transformation. Furthermore, of the 21 Spanish companies that are present again, 17 have improved their position compared to the previous year, which shows a positive and sustained trend in investment in research and development by the Spanish business sector. Why do many Spanish companies not appear in the ranking? There is a contrast between the number of companies that invest in R&D in Spain and those that ultimately appear in the ranking. According to data from the National Institute of Statistics (INE), more than 12.200 Spanish companies made investments in research and development in 2024. However, only a very small part of them appear in the list compiled by the Joint Research Centre of the European Commission. As the Cotec Foundation for Innovation points out, this gap is not due to a lack of innovative activity, but mainly to methodological and reporting issues. Many organizations do not report their R&D investments according to the methodological criteria required by the JRC, which means that a significant part of the innovative effort developed in Spain is not captured by the indicators used in the ranking, despite being real and, in many cases, significant investments. Added to this circumstance is the structural issue related to the very definition of innovative activities. R&D&I encompasses, in addition to Research and Development (R&D), Technological Innovation (IT), whose relevance in the Spanish context has increased significantly in recent years. The IMV 2023 Application Report, prepared by the Ministry of Science, Innovation and Universities, reflects the evolution of both concepts. In 2011, a total of 2.702 Binding Motivated Reports were issued, of which 57,8% corresponded to projects classified as Research and Development, while 37,4% were associated with projects classified as Technological Innovation. In 2023, this distribution was reversed, so that R&D reports accounted for 37,5% of the total, compared to 62,1% for IT projects. This evolution does not reflect a relative decrease in Research and Development projects in favor of Technological Innovation, but rather the accelerated and uninterrupted growth of IT in Spain for more than a decade, compared to a more moderate pace of R&D. In practice, many companies concentrate a growing part of their innovative effort on technological improvement activities, digitization, process optimization and incremental development, which do not always translate into adequate statistical recognition in international R&D rankings. However, it is worth noting that, compared to the number of Binding Motivated Reports issued in 2011, 8.127 reports were reached in 2023, which is a clear reflection of the growing commitment of Spanish companies to R&D&I in its various aspects. Managing R&D as a strategic business element: Investment in R&D requires more than just a one-off financial effort. For companies with recurring innovative activity, the challenge is to manage that investment consistently, ensuring that the resources used and the knowledge generated translate into tangible and measurable value for the business. Proper management of research and development involves clearly identifying innovative activities, carrying out consistent monitoring of projects, and having reliable economic information that allows for the evaluation of both the impact of the investment and its return. This approach not only facilitates decision-making and improves the efficiency of resources allocated to R&D, but also strengthens the company's competitive position in increasingly demanding and globalized markets. From this perspective, R&D becomes a strategic asset that requires a global vision and specialized management, aimed at maximizing the return on investment, providing continuity and stability to the company's innovative commitment, regardless of its size or sector. Systematizing processes, rigorous documentation, and alignment with corporate objectives are key elements for innovation to cease being a...Read more

On July 17, 2025, the Central Economic-Administrative Court (TEAC) issued two key resolutions (RG 5685/2024 and RG 1267/2025) that unify the criteria applicable to tax deductions for Research, Development and Technological Innovation (R&D&I) activities in the Corporate Income Tax. This decision represents a milestone for innovative companies, as it provides greater regulatory clarity and strengthens legal certainty in an area that, until now, generated significant uncertainty. A new scenario for R&D&I deductions Until recently, many companies were guided by the criteria maintained by the General Directorate of Taxes (DGT), which allowed them to apply R&D&I deductions generated in previous years, even if they had not been reflected in the initial self-assessment. Binding consultations such as V-802-2011, V-0297-2012, and V-2400-2014 supported this criterion, giving companies room to maneuver in planning the use of their tax incentives. The situation changed in June 2022, when binding consultation V-1511-2022 introduced a much more restrictive approach. From that moment on, deductions could only be applied if they were included in the corresponding tax return or if a correction was requested within the legal deadlines. This change caused uncertainty and generated risks for companies with R&D&I projects, which could lose significant tax benefits. TEAC Resolutions: Two Differentiated Regimes With the resolutions of July 2025, the TEAC definitively orders the panorama and distinguishes two clear scenarios: 1. Self-assessments prior to June 24, 2022 The TEAC respects the interpretation in force before consultation V-1511-2022. Therefore, R&D&I deductions generated before that date can be applied in subsequent fiscal years without having to modify the initial self-assessment, provided that the right has not expired. This represents a significant opportunity for companies that, for strategic or planning reasons, did not take full advantage of their deductions at the time. Now they will be able to recover them and optimize their tax burden. 2. Self-assessments from June 24, 2022 In subsequent fiscal years, the TEAC ratifies the mandatory nature of the new criterion. That is: Deductions must be included in the original return. If they are not reflected, it will be necessary to request a rectification within the established period. For companies, this means strengthening internal controls and tax management processes, preventing administrative oversight from leading to the loss of significant tax benefits. Strategic implications for innovative companies The new framework provides legal certainty in an area that is particularly sensitive for companies with investments in R&D&I. Among the main impacts are: Recovering pending deductions: Organizations with projects prior to 2022 have the possibility of reviewing closed fiscal years and applying tax deductions not yet used (as long as they are within the statute of limitations). Freeing up resources for innovation: Optimizing the tax burden allows capital to be redirected toward new technological developments. Demand greater control and planning: For fiscal years after 2022, deductions require more rigorous management and exhaustive documentation from the start of each project. Opportunity to review the R&D&I tax strategy. The current regulatory framework, combined with recent TEAC doctrine, offers an ideal context for analyzing and redesigning the management of tax deductions. Companies have up to 18 years to apply the generated benefits, which expands strategic possibilities. Turning this moment into a key opportunity to: Conduct a comprehensive review of tax balances: identify generated but unapplied deductions. Update internal policies: ensure that all R&D&I projects are properly documented from the outset. Designing long-term tax strategies: integrating innovation as a central element in optimizing resources and tax benefits. A more predictable tax framework that encourages innovation With these resolutions, the TEAC establishes a more stable and predictable environment for companies that invest in R&D&I. Legal certainty and regulatory clarity allow for planning larger projects without fear of interpretive changes that could compromise the associated tax benefits. At Elzaburu, we closely monitor regulatory developments regarding tax incentives for R&D&I with the goal of offering our clients up-to-date, rigorous advice aligned with their needs, helping them make the most of the opportunities offered by the current tax framework.   David Puentes, Head of Innovation Funding at Elzaburu.

We have recently learned of the decision of the Supreme Court (SC) which represents a very relevant update related to Tax Deductions for Technological Innovation that sets an important precedent. The Supreme Court has established that the report from the Ministry of Science for tax deductions for technological innovation is binding on the Treasury. Consequently, all of us who work to study and advise on the best formulas for financing innovation are pleased with the three judgments that have been issued in appeals n º 948; 1633 and 1635/2023. The Supreme Court ruling strengthens the application of tax deductions for R&D&i In summary, the Supreme Court establishes the binding nature for the Treasury of the Ministry of Science Report for tax deductions for technological innovation. The Contentious Court has recognised the right of the appellant companies to the tax deduction for technological innovation that they had applied in their self-assessments. Some key aspects, to put into context this decision of the Supreme Court that all actors related to R&D&i in Spain were waiting for, are the following: The Contentious Chamber annuls the sentences of the National Court that supported the reports of the Computer Support Team (EAI), an internal unit of the State Tax Administration Agency (AEAT), for contradicting the binding opinion on technological innovation that had been issued by the Ministry of Science and Innovation. The art. 35.4 of the Revised Text of the Corporate Income Tax Law (TRLIS) of 2004, provides that companies may request a report from the Ministry of Science and Innovation (MCIN) for tax deductions for technological innovation. According to the law, this report is binding on the AEAT. Given its terms, the report binds the AEAT in all its aspects, that is, not only in relation to the qualification of the project as part of such technological innovation, but also in relation to the investments and expenses that, presented by the companies, have been evaluated positively. In particular, such binding reports cannot be refuted or ignored by the AEAT bodies, either in the qualification of the projects as deserving of tax deduction, or in relation to the expenses included in the project.  The Ministry of Science's Motivated Report: Binding and Decisive for the Treasury. In short, at ELZABURU we interpret this decision of the Supreme Court as providing legal certainty to companies in the application of tax deductions for R&D&I, guaranteeing that the Binding Motivated Reports are fully respected by the AEAT (Spanish Tax Agency).  In fact, we have already received the estimate of an appeal for a client for whom we were defending the application of these deductions and the Tax Office has decided to fully uphold the appeals presented. However, since the Supreme Court has ruled on deductions for fiscal years to which the TRLIS regulations applied, which, as regards the regulation of reasoned reports, presents certain differences with respect to the current Corporate Tax Law (LIS), we will have to wait to analyze the rulings in depth, once they are published, in order to be able to conclude the effects of the same with the current legislation. We therefore recommend caution in view of a more careful and in-depth analysis of the sentences. In conclusion, the good news is that there are arguments and reflections in light of this relevant decision of the Supreme Court, to consider that legal uncertainty in the application of tax deductions for R&D&I is considerably reduced. New Challenges and Opportunities in the Legislation on Tax Deductions for Technological Innovation However, a reform of the current law would be convenient and necessary, so that it is better adapted to the sector of new technologies and ICT developments (Information and Communications Technologies), an industry that has an increasingly important and growing weight in our GDP, to better adapt the system of tax incentives to R&D&I projects in Spain. One proposal for improvement that we consider interesting to consider, for example, could be to carry out a comparative analysis with the countries around us (Portugal, France and Belgium, among other countries in the European Union) to try to emulate those laws that provide greater legal security to R&D+i-intensive companies in Spain. In any case, we would like to congratulate ourselves on this decision of the Supreme Court, as it provides the legal security that all the actors in the R&D&I sector have been longing for for many years. We therefore welcome this ruling, which supports the legislator's ultimate goals: to promote and encourage competitiveness and innovation in Spanish companies. David Puentes, Head of Innovation Funding at ELZABURU