Public aid and subsidies

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The Spanish Public Administrations carry out important work to promote various activities through their financial support by means of public subsidies and aid. The most important regulations on the matter are national in nature and they are Law 38/2003 of 17 November, the General Law on Subsidies and Royal Decree 887/2006 of 21 July which approves the Regulation of Law 38/2003 of 17 November, the General Law on Subsidies. Asturias has enacted its own regulation on subsidies, Decree 71/1992 of 29 October which regulates the general subsidy regime of the Principality of Asturias, but there are no significant differences between its regulation and the state one.

Both the autonomous Administration, the different municipalities and local entities, as well as the Instrumental Administration (such as the SEKUENS Agency in Asturias) call for numerous aid and subsidies for the promotion and development of different sectors. The SEKUENS Agency has a subsidies search engine at its electronic office.

Generally, subsidies are awarded on a competitive basis, after the publication of general regulatory rules (which define the requirements that applicants must meet and the eligible activity) and the attendant notices of convening which specify, inter alia, the filing period and the documentation that must accompany the applications in each specific case.

Subsidies may also be granted directly, or nominatively, for reasons of social or economic interest, but particular circumstances and requirements must be met which make this route the least common one.

To be a beneficiary of public subsidies, a series of requirements must be met, including being up to date with tax or Social Security debts or that the beneficiary does not have tax residence in a country classified as a tax haven.

Particularly important is the obligation for the beneficiary to justify both the defraying of eligible expenses and the use of the money granted to the subsidised action, according to the specific rules of the aid granted and the applicable legislation, since otherwise a subsidy reimbursement procedure could be initiated.

National Calls. Next Generation Funds

Economic activity in Asturias benefits not only from grants and subsidies provided by regional and local authorities but also from national-level grants, among which the ones distributed under the Spanish Government's Recovery and Resilience Plan (PRTR) stand out, which is Spain's strategy for channeling the European Union's Next Generation Funds aimed at addressing the damage caused by the COVID-19 crisis.

The PRTR is structured around 4 transversal axes: i) ecological transition; ii) digital transformation; iii) territorial cohesion and social equality; and iv) gender equality. These axes, in turn, are developed into policy levers and components, including fair and inclusive energy transition, modernization and digitalization of industrial and SME fabric, tourism recovery, and support for an entrepreneurial Spain, as well as modernizing the tax system for inclusive and sustainable growth.

In the execution of the PRTR, various policies have been approved, calling for numerous grants and subsidies, while also promoting and encouraging public procurement funded by Next Generation Funds. There is a search engine for tenders, subsidies, and grants under the PRTR framework that allows for monitoring their status, and it is subject to continuous updates.

In the specific case of the Principality of Asturias, it has a tool for capturing European projects and a European Projects Office that, together with the SEKUENS Agency, offer advice and information on how to access the various PRTR mechanisms to develop projects or activities that benefit from European funding.

Other Types of Public Assistance or Economic Activity Promotion Instruments from a Tax Perspective

Promotion of investment and economic development is also typically realized through means other than direct financial contributions. Specifically, from a tax perspective, there are several examples of fiscal benefits:

• In the area of Corporate Income Tax (IS), national-level deductions to the tax liability have been regulated to incentivize certain activities, such as scientific and technological research and development or the creation of film productions, audiovisual series, and shows.
  
  Additionally, internationalization of Spanish companies and foreign companies' investments in Spain are promoted by establishing mechanisms to prevent double taxation in tax laws and by entering into agreements with other countries in this matter, such as the so-called Double Taxation Conventions (DTC) that have the status of international treaties.
  
  Likewise, the Corporate Income Tax Law 27/2014, of November 27, includes special taxation regimes, such as mergers, divisions, asset contributions, exchange of securities, and changes of registered office from a European company or a European cooperative of one Member State to another within the EU, fostering economic growth and corporate reorganization transactions and investment in companies through income taxation deferment.
• Regarding Personal Income Tax (IRPF), we will explore the special tax regime applicable to workers, professionals, entrepreneurs, and investors relocating to Spanish territory as a clear means to attract talent to our country due to more favorable tax treatment than in other neighboring states.
• Additionally, there are other mechanisms to incentivize certain activities of general interest, such as tax deductions to the tax liability in both the Corporate Income Tax and the Personal Income Tax and the Non-Resident Income Tax (IRNR) for companies that make donations to Priority Patronage Activities (APM) and/or Events of Exceptional Public Interest (AEIP) as determined by the General State Budget Law for each year.
  
  To give just one example, the General State Budget Law for the year 2023 declares APM the activities carried out by the Fundación Deporte Joven (Youth Sport Foundation) in collaboration with the Consejo Superior de Deportes (Higher Sports Council) under the "España Compite: en la Empresa como en el Deporte" (Spain Competes: in Business as in Sports) project with the aim of contributing to the promotion and projection of Small and Medium Enterprises (SMEs) in the domestic and international spheres, enhancing sports, and promoting the entrepreneur as a growth driver associated with sports values. Thus, the patron company, under certain conditions, can deduct 40 or 45% of the amount of the donation from its Corporate Income Tax liability, as long as it includes it as a non-deductible expense (positive adjustment) in its taxable base.

All of these tax incentives for economic activity promotion, along with some others, will be examined in their respective sections within the Tax System segment.