On 4 July 2018, the Spanish Government published Law 6/2018 (the Budget Law 2018) in the Official Journal. The law implementing the fiscal measures from the fiscal year 2018 entered into force on 5 July 2018. Budget contains changes to the patent box regime and to the corporate income tax installment payment calculations for venture capital entities.
Under the Patent Box, 60% of qualifying net income arising from the licensing or transfer of qualifying intangible assets will not be subject to corporate income tax if certain conditions are met (the remaining 40% will be subject to the normal corporate income tax rate of 25%).Under the new legislation, which applies to tax periods beginning on or after January 1, 2018, qualifying intangible assets are limited to patents, utility models, supplementary protection certificates for medical purposes, legally protected models and designs and registered software that results from R&D projects. The new rules clarify the definition of income eligible for the partial exemption under the patent box to ensure that the reduction applies only to “profits,” rather than to gross income.
The Budget Act 2018 also introduced an important change for venture capital companies that are required to pay corporation tax payments. The new legislation exempts venture capital entities that are requied to the rules from making installment prepayments based on their accounting profit, i.e. the installment payments for all such entities will be roughly 24% of their taxable income, which will exclude tax-exempt income from the installment payment calculation base. The change will apply beginning with the October 2018 installment.
