There are only a few days left to reach the middle of this year 2022 and also to start the filing of the 2021 Corporate Income Tax, a date eagerly awaited by the team of Asesoría y Consultoría Fénix and its clients.
Surely you are interested in the novelties for this year, and I am going to reveal them step by step.
First…
What is Corporate Income Tax?
The figure of the self-employed is not the only legal figure, there are many more. And if a self-employed person declares the “accounts” of his activity in the Income Tax Return, the companies and other entities do it through the Corporate Tax.
If you have landed on this page by chance or are simply looking for information about this tax, you should know that it is a personal and direct tax levied on income obtained by companies and other legal entities residing in Spanish territory.
It is structured around the accounting and the determination of the accounting result of the company or organization. It represents the starting point for determining the taxable income and the amount to be paid annually.
What is the deadline for submission?
Once this association has been made, you should know that the deadline is much shorter, in this case it is a little more than three weeks to file the Corporate Income Tax. Starts July 1, 2022 and ends July 25, 2022.
The Corporate Income Tax Return is made by filing Form 200, and Form 220 if it is for groups of companies.
How is the taxable income calculated?
To obtain the amount to be paid for corporate income tax, the difference between the income obtained and the expenses incurred in the year must first be calculated.
To this result, also called Operating Result, corrections or adjustments are applied due to existing differences, if applicable, and we will obtain the previous taxable income.
If there are negative taxable bases from previous years (losses to compensate), they can be subtracted at this moment, and thus we will obtain the taxable base. The only thing left to do is to apply the tax rate to obtain the total tax liability.
The allowances and deductions to which we are entitled can be deducted from this total tax liability. Finally, applying the withholdings and payments on account supported (if any) the differential quota would be obtained. This amount represents the payment that will have to be made to the Treasury.
How much tax is paid?
One of the main reasons why companies, or other legal entities, are attractive is the tax advantage. That is to say, the tax burden is lower compared to that of a self-employed person, if certain limits are exceeded.
There are several tax rates (percentages):
- General tax rates of 25% for: Credit cooperatives, rural savings banks, general mutual insurance companies, mutual guarantee companies, political parties, mutual benefit societies, communities owning neighboring forests in common hand.
- Special tax rates:
- Micro-companies and small entities: 25%.
- Newly created entities: 15% applicable in the first tax period in which the taxable income is positive and in the following period.
- Fiscally protected cooperatives: 20% (extra-cooperative results will be taxed at the general rate).
- Non-profit entities that apply the tax regime provided for in Law 49/2002: 10%.
- Investment companies and funds and bank asset funds: 1%.
What are the implications of paying the tax?
If the result has been positive (there have been profits) it implies the obligation to present the Form 202, which represents the payment in installments of the Corporate Income Tax. That is to say, a payment on account for the next fiscal year. This model is presented and paid during the months of October, December and April (following year).
The rate or percentage to be applied in installment payments (in general) is 18% of the amount paid on Form 200.
Which accounting books are required to be filed?
As you have been able to see, we have not finished yet. Companies and entities obliged to pay corporate income tax are also obliged to keep accounting books:
- Journal, which chronologically records the amount of all transactions.
- Inventory and annual accounts book, which opens with the company’s initial balance sheet and periodically (quarterly) collects subsequent trial balances.
- Corporate books such as the minute books, nominative shares and the partners’ registry book.
What are the novelties in the Corporate Income Tax for this fiscal year 2021?
One of the main tax innovations included in the General State Budget Law for the year 2022 is the minimum taxation in I.S. for certain companies. Specifically it is 15% for:
- Those with a net turnover of 20 million euros or more during the 12 months prior to the date on which the tax period begins.
- Those taxed under the tax consolidation regime.
In any case, the liquid quota (another novelty), previously called differential quota, cannot be less than the result of applying 15%. There are also exceptions and that is why we recommend asking for help in this type of management to professionals and specialists.
The Fénix Advisory and Consulting team will be happy to provide you with the help you need. To contact us, you can do it from HERE.
And finally… Would you be interested in a post where I talk about the main differences between the figure of the Self-Employed and that of a Company?
And by the way, which one is more interesting, and when?
I read you in the comments. Thanks for making it to the end.
