Problems arise with this type of company. The RIC can only be applied to profits arising from business or professional activities and not those originating from the ownership of patrimonial assets.

Non residents are apply to the RIC if they operate from permanent premises within Spain. It must always be made clear that the activity takes place in Spain and that reinvestment must also take place in the Canary Islands. The means of production (material, technical, organizational, and human) must be permanently situated in the Canary Islands.

Activities arising solely from the possession of assets, both material and financial, with a purely investment purpose, must be excluded from the RIC.

The law established three years from the date of accrual of the tax. The realisation in the article is quite confusing. This has been solved by allowing up to a 5 year period to bring to fruition the RIC.
Used Assets. Improvements in technology.
Used assets can be accepted if they comply with the following double requirement:

If they have not gained previously from a tax benefit.
If they represent a technological improvement for the company. This in itself poses a double requirement.

a) That it is an improvement for the company. This means that it is regarded as an innovation or a positive qualitative change.

b) Technological Innovation. An improvement exists if the company has improved the quality of its products or reduced the production cost. There is also considered to be an improvement when there is an innovation in the distribution or production process. This must be proven in the case of inspection.

Rehabilitation assimilates the investment of a used asset. This is admitted when the cost is superior to the acquisition of the used building.

Land

Surrounding access land to the building. This would be gardens or sports annexe, leisure zones, theme parks or fairgrounds that are economically exploited.

Real Property that is purchased for leasing

It is not the spirit of the law and is causing an increase in the price of land. In the future it will only be possible if different economic activities, apart from just leasing, are carried out.

Keeping the Investment

There is a minimum of 5 years or a lifetime in the event of this being an inferior period.

Formal Obligations

Identification in the accounts of the assets where the RIC has been applied in every accounting year.

The RIC must show in the balance as a separate or under an appropriate heading.

Business or professional individuals can apply the RIC if they keep the necessary accounts (General Plan of Accounting).

The profit must be generated in the Canary Islands by transactions carried out in the canarian archipelago with the means of productions situated here.

The RIC can not be applied to profits that are generated only from the possession of assets or the administration of moveable or real estate assets.

Maximum amount. With legal entities it is 90% of the profit as shown in the accounts. With individuals the fiscal benefit will not exceed more than 80%

Each person or company that wishes to take advantage of the RIC must keep their accounts in line with the Code of Commerce (GPA)

The investment will be understood to have been carried out when the assets are in operation.

If a used asset is rehabilitated and in the end the cost of the reform is more than the cost of the used asset, the total amount of the investment may be considered as a new asset.

It is not advisable to apply the RIC to real property that is purchased with the sole intention of leasing except in certain cases (state subsidised housing, old peoples homes or hospitals etc.)

In the future large investment projects will be able to be carried out.