Please remember that tax savings always derive from an appropriate planning, that should be designed well in advance.

Spanish Corporate income tax is due on the 25 days following 6 months as from the end of the fiscal year. Throughout the fiscal year, Spanish taxpayers are obliged to advance the final tax during the months of April, October and December.

Such payments are creditable against the final tax. However, the current regulations establish a minimum payment based on the accounting result for companies whose turnover in the preceding 12 moths was of, at least, 10 million Euro.

Knowing how these rules work out as well as going through the appropriate planning of the accounting result in each relevant period can lead to significant tax savings as well as to the effective deferral of the tax payment.

This month, Spanish companies and permanent establishments are obliged to pay on account of the final Corporate income tax no later than on the 20th of October. The following methods of calculation can be applied:

  1. 18% of the tax quote of the last fiscal year whose filing deadline is overdue on the 1st of October. For companies whose fiscal year coincides with the calendar year, the last fiscal year to take into consideration is 2016, as the filing deadline of the 2016 Corporate income tax return was on July 25, 2017.
  2. Based on the taxable result obtained from the fiscal year beginning up to September 30. This system is mandatory for companies whose standalone turnover in the 12 months preceding the beginning of the fiscal year exceeded 6 million €, and it can be elected by the rest of taxpayers. Although the percentage for companies subject to the standard 25% Corporate income tax annual rate is 17%, the following rates apply, depending on the companies standalone turnover in such preceding period:
  • Higher than 6 million € but lower than 10: companies are subject to the standard 17% advanced payment rate.
  • At least 10 million €: 24%, when companies are subject to the standard 25% annual Corporate income tax rate. In addition to being subject to a higher rate, these taxpayers are subject to a minimum payment of 23% of the companies’ accounting result during the period of reference of the advanced payment. This implies not taking into account eventual negative book to tax adjustments or pending tax losses carried forward from previous fiscal years, that will ultimately decrease the final annual Corporate income tax due, despite the fact of having advanced a substantial amount of tax.

It is, therefore, strongly recommendable to accurately plan, in so far as possible, the accrual of earnings which may be deferrable to the month of December and that would not be included in the advanced payment computation despite forming part of the final accounting result. Such would be the case, for example, of dividends exempt from tax at the level of the shareholder company or of exempt capital gains deriving from the sale of qualifying shares.

Please remember that tax savings always derive from an appropriate planning, that should be designed well in advance.

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Publicado el 10-2017 por PBS