In order to operate under current legislation, companies must comply with a series of tax obligations that vary according to the type of company in question, the volume of its activity and its tax regime.
Types of companies and their taxation in Spain
There are different legal forms of Spanish companies and the taxation applicable to them according to their type.
Public Limited Company (SA) and its tax obligationsPublic Limited Company (SA) and its tax obligations
This is one of the most common forms for large companies. It allows the issue of shares and has a limited liability of the partners. Its tax obligations are:
- Corporate income tax: it is taxed on its net profits.
- Obligations to file tax forms: this refers to Form 200 (corporate income tax return), and as instalment payments in Form 202.
Limited Liability Company (SL) and its tax obligations
This is the form most commonly used by small and medium-sized companies. It allows a simple incorporation and limited liability of the partners. In terms of obligations, these are:
- Corporation tax: in the same way as the SA, the SL must pay it.
- Form 303: periodic declaration of Value Added Tax (VAT).
Cooperatives and other corporate forms: tax obligations
Cooperatives have special tax treatment, in that they enjoy benefits such as reduced corporate income tax rates. There are other forms of company that also have specific tax obligations in relation to their tax regime, such as labour or civil companies.
Corporate income tax in Spain
Let’s take a look at the main characteristics of this tax, one of the most important for companies.
What does corporation tax refer to?
Also known as IS. It is a direct tax on profits generated by companies and legal entities resident in Spain. The calculation is made in relation to the net profit of the company, i.e. subtracting deductible expenses from income.
Calculation of corporate income tax
It is based on the company’s taxable profit, on the basis of which a series of deductions and allowances are applied, which may vary according to its economic activity and investment.
IS tax rates
The general rate of IS is 25%. For entities such as cooperatives, it can be as high as 20%.
Tax forms to be filed by companies
All companies in Spain are obliged to file various tax forms throughout the year. The three most common are:
Form 200: Corporate Income Tax Return.
This is the annual corporate income tax return. It reflects not only the company’s results, but also the amount to be paid to the tax authorities. An important detail to mention is that this form must be filed within 25 days after the sixth month following the end of the tax year.
Form 202: Tax payment in instalments
This form is generally used for IS payments in instalments. It allows companies to declare the payments on account that they make during the year.
Form 222: Consolidated tax return
If a group forms a fiscally consolidated group, it is obliged to file this form in order to declare the profits or losses of all the entities that make up the group.
Additional tax obligations for companies
In addition to the aforementioned corporate income tax, there are other types of taxes and obligations that companies must comply with, such as:
Withholdings and payments on account: Form 111 and 115.
Companies must make withholdings on account on their employees’ salaries (Form 111) and on payments to suppliers (Form 115).
Value Added Tax (VAT): Forms 303 and 390
For the periodic settlement of VAT, companies must file Form 303, and for the annual VAT summary return, Form 390.
Informative declaration of operations: Form 347
In addition, companies are obliged to file the Informative declaration of operations with third parties (Form 347), in the event that they have carried out operations exceeding 3,005.06 euros per year with the same client or supplier.
Filing deadlines
Key tax filing dates
As mentioned above, IS is filed within 25 days following the sixth month after the end of the tax year. VAT forms (303 and 390) must be filed quarterly and annually, respectively.
Penalties for failure to comply with deadlines
Penalties for late compliance with deadlines can be financial, and they increase with the longer the delay.
Tax deductions and benefits for companies
As well as corporate taxes, there are various tax deductions to reduce the tax burden:
Deductions for investment in R&D&I
Companies that invest in Research, Development and Innovation receive tax deductions in the IS.
Allowances for start-up companies
These companies are entitled to a tax credit in the IS. This allows them to reduce their tax rate during their start-up period.
Regional and sectoral incentives
Additional tax incentives are available depending on the region or sector of activity. They allow them to encourage investment in specific areas.
Consequences of non-compliance with tax commitments
Respecting tax obligations is not a choice. Failure to do so can have serious consequences for companies.
Types of tax penalties
These are generally financial penalties, but in serious cases, they can mean the suspension of the company’s activity.
Tax inspection procedure
If the Tax Agency detects irregularities in the tax management of a company, it has the power to initiate an inspection procedure that leads to the imposition of sanctions.
Tips for optimising the taxation of a company
No company wishes to enter into conflictual relations with the tax authorities. Proper tax management is therefore vital. To achieve this, we offer the following advice:
Tax consultancy: importance and benefits
It is recommended to have a specialised tax consultancy in order to ensure not only compliance with tax obligations, but also to take advantage of available deductions.
Technological solutions for tax management
Using tax management software can be a useful tool to facilitate the filing of tax returns, control of deadlines and calculation of deductions.
Good practices for complying with tax obligations
Making payments on time and maintaining a relevant organisation of tax and accounting documents is a good way to avoid irregularities.
Conclusions
For companies to function well, it is vital to comply with tax obligations and to be aware of the tax forms to be filed, the payment deadlines and the tax deductions available.
In this way, companies can manage their tax burden in a satisfactory manner, avoiding the imposition of penalties.To this end, it is essential to have good advice on the subject and to adopt good tax management practices.
