The tax incentives available for audiovisual production and the production of performing arts and musical performances are currently a central component of the funding process for these projects. However, until now, it was unclear whether“reality shows” could take advantage of these incentives.
The General Directorate of Taxes has clarified this issue in its binding ruling V2673-22, which we briefly discuss below.
The inquiry was submitted by a Canarian production company, registered in the Administrative Registry of Film and Audiovisual Companies of the Ministry of Education, Culture, and Sports, which provides production services for foreign feature films and is therefore entitled to the tax deduction provided for in Article 36, paragraph 2, of the Corporate Income Tax Law (hereinafter LIS).
The resolution establishes that, in the absence of a legal basis for classifying the various types of audiovisual projects on the market, one must, in accordance with Article 3 of the Civil Code, interpret the provision based on the plain meaning of the words.
Thus, based on the definition of “documentary” provided in the regulations, the DGT considers that the“reality show”program referred to in the inquiry may be classified as a documentary and, therefore, may be eligible for the deduction discussed here, provided that it has an informative, educational, or experimental nature.
This represents a significant step forward in clarifying and interpreting the limits of tax deductions for this type of project, providing guarantees and legal certainty for similar projects that wish to use these deductions as a financing mechanism.
Jaime Hormeño, attorney at ELZABURU