Spain has been becoming the film set for large international film projects for years thanks to the tax incentives applicable to these investments. “We aspire to become the Hollywood of Europe,” said the president of the government, Pedro Sánchez, in July 2021, when he visited Universal Studios during a budget tour of the United States. Clash of the Titans 2 (Warner Bros. and Cott Productions); Cold daylight (Summit Entertainment and Intrepid Pictures); Fast and furious 6 (Universal Studios Company); Exodus: Gods and kings (Scott Free Productions and 20th Century Fox), game of Thrones (HBO Entertainment) or Star Wars (Lucasfilm and Walt Disney Pictures) are some of the international feature films and series shot on Spanish soil until the Revenue Agency put them under scrutiny when it realized they were wrongly taxing their profits. The National Tribunal ruled in favor of production companies, which formed groups to attract funding, and earlier this year upheld several appeals against the Treasury’s claims. Now, the same judicial body supports private investors who participated in said consortia.
Since 2004, the Corporation Tax Law has included the figure of Economic Interest Groups (EIAs) to allow production companies to deduct corporation tax on investments made in audiovisual productions. This was one of the great measures to make the Canary Islands, Andalusia, Catalonia and Madrid become locations for films and series, which subsequently also attracted thousands of tourists.
The main condition for this tax reduction, according to the current legislation on corporate tax (in force since November 2017), is that the Institute of Cinematography and Audiovisual Arts (ICAA), a body dependent on the Ministry of Culture, or the corresponding body of the Autonomous Community with jurisdiction in the matter (such as the Canary Islands, with greater tax incentives), certifies that the content of the films has a cultural character linked to Spanish reality or contributes to cultural diversity.
Banking entities such as Santander or Bankinter participated; the audiovisual group Telecinco Cinema (Mediaset) and Atresmedia Cine; the telecommunications groups Vodafone or R Cable and Telecable Telecomunicaciones (MásMóvil); the airlines Air Europa and Binter; jewelers like Tous and Cristian Lay; the car rental companies Ok Mobility and Record Go; and other companies such as Isolux Corsán (now defunct) or Fain Ascensores. However, despite having this certificate, the Spanish Treasury canceled many of these groups’ tax agreements, understanding that these were structures created to reduce their tax burden.
Millionaire tax deductions
The IEA’s Clash of the Titans IIthe one formed for the sixth chapter of the saga Fast and furious (both chose the Canary Islands), Cold daylightwhere the famous Bruces Willis and Sigourney Weaver performed (whose main venues are Madrid and the Valencian Community), and Exodusdirected by Oscar-winning director Ridley Scott (who filmed in the Tabernas desert, Almeria) were some of those who opposed the Treasury. After the Central Administrative Economic Court (TEAC) ratified the Revenue Agency’s criteria, the groups initiated legal proceedings to obtain approval of deductions totaling more than 60 million euros represented by these films, plus interest. Legal sources familiar with these processes point out that the Treasury could face repayment of more than 100 million if more projects awaiting resolution are added.
Several rulings issued by the Administrative Litigation Chamber of the National Court in the first quarter of 2025, advanced by CinqueGiorniconcluded that this type of economic group should be regarded as a film production company and not as “an apparent structure created to provide tax advantages to its participants, as the Inspectorate understands”. The Court, relying on a previous Supreme Court ruling on R&D&I deductions to promote research, insisted that the Revenue Agency cannot adopt a different criterion than that previously adopted by the Ministry of Culture, whose certification of the validity of the IEA is “binding”.
In light of these statements, the National Court also ruled in favor of investors in film projects, thus strengthening the co-production scheme. Following the same criteria as the IEA, the magistrates conclude that their tax returns are correct. In four sentences pronounced between last June and September, consulted by this newspaper, the Court reiterates the arguments already presented in the resolutions that endorsed the groups’ tax deductions. “The relevant grounds of appeal follow a similar line of argument”, explain the latest sentences. Among the latest victories is a subsidiary of the MásMóvil group, now MasOrange. This was one of the companies that invested in this type of production which allowed tax deductions to be applied.
The Revenue Agency canceled the tax returns of its participants, deeming their business ineligible to obtain tax benefits for their film investment, having previously declared that the group they were part of did not have producer status, according to its interpretation of the tax law. However, the investors followed the same legal strategy as the EAI and obtained the same result: the cancellation of the liquidations and the reimbursement of any sums deposited to regularize the situation while the matter was resolved through the courts.
