This report addresses the interrelationships between taxation, innovation and environment in Spain. This report addresses the interrelations among taxation, innovation and the environment in Spain. It initially describes the main public policies in the areas of innovation and the environment, along with the role and importance of the environmental issues within the R&D and technological innovation (R&D&I) programmes. The report focuses on the analysis of two deductions in the Spanish Corporate Income Tax: a deduction for expenses on R&D&I and a deduction for environmental investments. In both cases, their main characteristics and scope are described. Then, a quantitative analysis of the environmental implications of the R&D&I deduction is undertaken. For the period 2000 – 2005 it was found that the use of this deduction increased slightly but significantly the application of additional environmental investments in subsequent years. On the contrary, the tax deduction for environmental investments was proved to have no significant consequences on R&D and technological innovation. This is mainly because this deduction considers as eligible investments that simply aim to fulfil existing regulation, which imply less innovation that would otherwise be need if only measures going beyond legal obligations were eligible for the environmental tax deduction. Finally, some additional conclusions and recommendations are presented.

This work was done by agreement between the Organization of Economic Cooperation and Development (OECD) and ENT Environment and Management, with funding from the Institute for Fiscal Studies (Ministry of Economy and Finance). It was developed during a stay of the author (Ignasi Puig Ventosa – ENT) in the OECD, Paris.


ENT environment & management