Spanish 2019 Corporate income tax season is about to start
The changes in the deadlines to formulate and approve the Spanish companies annual accounts generated doubts as to whether the 2019 Spanish Corporate income tax (CIT) season would start as of July 1st this year, as it has done so in the past.
The Spanish Government have just passed new regulations clarifying that the filing CIT season remains unchanged but has also introduced a new possibility of filing amended CIT returns when the one initially filed does not match with the final approved annual accounts.
Let us see how can this be worked out.
✔ By way of introduction, we remind you that Spanish companies must file their annual CIT return in the 25 days following the six months after the fiscal year closing date. This implies that companies whose fiscal year coincides with the calendar year must file their annual 2019 CIT return between the 1st and the 25th of July 2020.
✔ Due to the state of alarm caused by the COVID 19 pandemic, the terms to formulate and approve the companies’ annual accounts have been changed as follows:
- The formulation of annual accounts by the company’s administration body must be done within the three months as from the 1st of June 2020.
- The annual accounts’ approval must be done within two months as from the end of the deadline to formulate them.
✔ Based on these deadlines, the Spanish 2019 CIT return filing season remains as follows:
- The CIT return must be filed in the 25 days following the six months after the fiscal year closing date. If the annual accounts have not been approved at the end of such period, the tax return has to be filed with the available annual accounts which can be the following:
– The audited annual accounts.
– The annual accounts formulated by the governing body, if the audited annual accounts are not available.
– The accounts kept by the company, if none of the previous documents are available.
- If the final approved annual accounts differ from the ones taken into account upon filing of the initial tax return, companies will need to file a new tax return no later than on the 30th November 2020.
- If this second tax return results:
– In a tax quote higher than the initial one or in a lower tax refund due in favour of the taxpayer, late payment interest will ned to be paid by the taxpayer on such difference, to be computed as from the end of the initial deadline, (July 25).
– In the rest of cases, the amended tax return will have effects as from its filing date.
- An important matter to take into account is that the six months term so that the Spanish tax authorities refund any amount due without computing any interest in favour of the taxpayer shall be counted as from November 30, 2020.
✔ As we anticipated in a previous post, this is a situation without precedent up to nowadays for an unknown context.
Expected changes to the Spanish Corporate Tax 2019
The agreement considers that sufficient public taxes are needed to maintain a robust social State that guarantees equal opportunities and social cohesion.The Spanish government has recently reached a General State Budget Agreement for 2019, with one of the groups from the opposition, that contains significant tax measures, although still pending approval. The Agreement considers that sufficient public taxes are needed to maintain a robust social State that guarantees equal opportunities and social cohesion. Likewise, it qualifies taxation as a powerful influence of encouragement for the economic agents that favour changes that orient towards a more just, inclusive and sustainable economic growth.
These measures encompass traditional tax such as that of Corporate and Personal income tax or VAT and include new tax figures such as the Tax on Financial Transactions and the Tax on Certain Digital Services, in accordance with the recommendations of the main international organizations.
Although there is still a way to go before these measures come into force, it is worth knowing their guidelines beforehand, which we summarise in the Corporation Tax area.
- A minimum rate of 15% is created, so that effective taxation is not reduced by the use of deductions and tax reliefs. This measure affects solely the groups that are taxed under a fiscal consolidation regime and companies that are not part of groups but whose net amount of turnover is equal to or greater than 20 million euros. This minimum tax will be 18% for the banks and exploitation entities of hydrocarbons whose general rate of 30% is higher than the ordinary rate of 25%.
- The exemption on foreign dividends and capital gains, currently of 100%, will be reduced by 5%.
- Companies that invoice less than one million euro will see the nominal rate of the Corporate Tax reduced from 25% to 23%.
- The Tax Agency and not the CNMV will be competent to declare, for tax-only purposes, the non-compliance with the requirements established for the SICAV in the financial regulations and from which the tax regulations make the application of the special Corporation tax regime of 1% dependent. The Agreement foresees that additional requirements will be established for the application by the SICAV of the reduced tax rate aimed at ensuring its character as a collective investment instrument, establishing a limit of concentration of capital in a single investor, objectifying the collective nature of this vehicle.
- In line with the measure promoted by 10 EU countries, a tax rate of 15% is expected to be applied to the profits not distributed by the Listed Public Investment Companies in the Real Estate Market (SOCIMI), which currently enjoy a tax of 0% on the income obtained in the exercise of its main business of rental of real estate
You might also be interested in:
- At PBS we can help you with the Spanish Corporate Income Tax 2019: Fiscal consolidation, preparation of returns and payments by instalments
Publicado el 06-2020 por PBS