Corporate income tax advance payments are mandatory for all resident corporations and Spanish permanent establishments.

Because of the changes undergone by the tax regulations in the most recent years, the calculation of the advanced payments has become much more than a simple application of a percentage on the taxable base, especially for those entities with a minimum turnover of 10 million Euro.

We remind you today of the corporate income tax advance payments highlights, as the next filing deadline is April 20, 2014.

Three payments are mandatory throughout the year, during the first 20 calendar days of April, October and December.

Small-sized companies pay 18% of the tax liability corresponding to the last Corporation tax return filed on the first of April, October and December, respectively.

These entities can also elect to apply an alternative system, not based on the last quote paid, as it is further detailed below.

Companies with a minimum turnover of 10 million Euro are obliged to calculate their advanced payments based on the tax result obtained from the beginning of the fiscal year up until March 31, September 30 and November 30, respectively.

Depending on their turnover, the applicable rate can range from 21% to 29%.

The Spanish General Directorate of Taxes recalls the tax treatment of the free rendering of services in a tax related transaction

Besides the limitation to offset pending tax losses established for entities with a turnover exceeding 20 million Euro as well as on the application of the international double tax relief on dividends and capital gains, a minimum payment of 12% of the accounting result for the period taken into consideration is required.

These payments are credited towards the final tax due at the end of the fiscal year. However, their temporary increase due to austerity measures has implied a significant financial effort for Spanish taxpayers in a credit – shortening context, a fact that should not be exempt from criticism.


Publicado el 04-2014 por PBS