AI investment in the middle market: how to take advantage of tax benefits

Artificial Intelligence has become one of the main drivers of competitiveness for middle-market companies. Automation, predictive analytics, process optimisation and improved decision-making are just some of the advantages that many organisations are already benefiting from.

In fact, several forecasts suggest that by 2026, around 64% of Spanish mid-sized companies will increase their investment in AI, placing them above the European Union average.

This growth is not only driven by the search for greater productivity. It is also being fuelled by technological advances such as devices equipped with NPUs (Neural Processing Units) capable of processing up to 50 TOPS locally, making it possible to run AI models directly on corporate devices with greater speed and data security.

What many companies are still not taking advantage of is that these investments can generate significant tax benefits.

The rise of AI in middle-market companies

Access to AI tools has rapidly become more widespread. What a few years ago was reserved for large corporations is now accessible to mid-sized companies thanks to:

• Software based on AI models.
• Intelligent automation platforms.
• Predictive analytics solutions.
• Hardware optimised for neural processing.

This makes it possible to apply AI across multiple business areas, such as financial planning, operations optimisation, commercial data analysis, administrative process automation and talent management.

In many cases, these initiatives involve technological projects with a clear innovative component, opening the door to relevant tax benefits.

 

I want more information

 

Tax deductions for R&D&I projects

The main tax incentive for these investments is found in the Corporate Income Tax Act. This regulation distinguishes between two categories of activities, each with different requirements and deduction rates: Research and Development (R&D) and Technological Innovation (TI).

Research and Development (R&D) activities

Research is defined as “planned original investigation aimed at discovering new knowledge”, while development refers to “the application of research results (…) for the manufacture of new materials or products or the design of new processes”.

In the field of AI, this translates into projects involving significant scientific or technological novelty, such as:

• Creation of advanced software using new theorems and algorithms.
• Development of proprietary predictive models that represent substantial technological progress.
• Design of new operating systems or languages for AI applications.

General deduction rate: 25% of expenses incurred and 42% on the excess amount over the average expenses of the previous two years. In addition, an extra 17% deduction applies to personnel costs for qualified research staff assigned exclusively to R&D.

Technological Innovation (TI) activities

The law defines technological innovation as an activity resulting in “technological progress in obtaining new products or production processes, or substantial improvements to existing ones”.

This category is often the most relevant for the middle-market, as it does not require original research but rather substantial improvement. This includes projects such as:

• Integration of advanced automation systems that significantly improve a production process.
• Development of intelligent software to optimise internal processes that is technologically different from existing solutions.
• Pilot projects for testing new AI applications in operations or services, provided they cannot be used for direct commercial exploitation.

General deduction rate: 12% of expenses incurred during the tax period.

AI training: an underused opportunity

Another key aspect of AI adoption is team upskilling.

Companies can benefit from training programmes promoted by public administrations, such as subsidised courses through the State Foundation for Training in Employment (FUNDAE), to train their professionals in:

• Use of autonomous agents.
• Predictive analytics tools.
• Business process automation.
• Data-driven decision-making.

The combination of technology investment + team training is one of the factors with the greatest impact on the success of AI projects.

Why many companies are not taking advantage of these incentives

Despite the opportunities, many mid-sized companies do not apply R&D&I deductions related to technology. The reasons are usually:

• Lack of awareness of the incentives and their compatibility with other aid schemes.
• Difficulty identifying which projects qualify as R&D or TI.
• Lack of technical documentation proving the project’s novelty and technological progress.
• Absence of specialised advice to ensure legal certainty.

As a result, projects that could generate tax savings often go unnoticed.

Frequently asked questions about AI investment and taxation

Does purchasing AI technology always generate tax deductions?

Not necessarily. To apply R&D&I deductions, there must be a component of technological innovation or development, not simply the purchase of standard software.

Can mid-sized companies apply these incentives?

Yes. R&D&I deductions are not limited to large companies. Many middle-market companies can benefit if they develop or implement innovative technological projects.

Is it compatible with other public aid?

In many cases, yes. Depending on the project, tax deductions can be combined with grants or digitalisation support programmes.

How Adlanter can help

At Adlanter, we help companies align their technological transformation with tax optimisation.

Our team analyses each project to:

• Identify whether it qualifies for R&D&I deductions.
• Properly structure the technical and tax documentation.
• Optimise the impact on Corporate Income Tax.
• Maximise the return on innovation investments.