On 30 September Royal Decree-Law 2/2016 was published introducing tax measures aimed at reducing the public deficit (Official State Gazette 30-9). Likewise, on the same day, Order HAP/1552/2016 was published amending the Orders governing model forms 202 and 222 to adapt them to the legal changes.
This Royal Decree-Law establishes a series of amendments for the payment of corporate tax in instalments which will be applicable from the payment of the next instalment due on 20 October. However, it will not be applicable if the payment to be made can be attributed to a tax period commencing prior to 1 January 2016.
The amendments introduced through this new Additional Provision, the fourteenth, to Law 27/2014, on Corporate Tax (hereinafter, LCT), affects entities who determine the amount of payments by instalments using the modality of taxable amount in accordance with the provisions of article 40.3 of the LCT and, who, additionally, had a net turnover amount in the 12 months prior to the commencement of the tax period, of at least 10 million euros.
The net turnover amount will be calculated individually even if the entity is part of a commercial group, as provided for in the Commercial Code. However, in the case of entities applying the fiscal consolidation regime, turnover will be that of the tax group.
The amount to be paid in hence forwards to cover the instalments by those entities meeting the requirements listed above, will be calculated in the following way:
- The percentage used to calculate the payment by instalments, rather than 17% of the taxable amount, will be the result of applying to said amount the percentage resulting from multiplying the tax rate by 19/20 rounded up, i.e., 24% (19/20 x 25%), for those entities paying the general tax rate.
- In general, the amount to be paid in may not, in any case, be less than 23% of the positive account balance of 3.9 or 11 months (if your tax period coincides with the calendar year), only those instalments paid in beforehand during the tax period being deductible. In the case of taxpayers who are taxed at 30%, such as credit institutions, entities engaged in the exploration, research and exploitation of deposits and underground sources of hydrocarbons, the minimum percentage of the account balance will be 25%.
The following income streams will be excluded from the above-mentioned positive accounts balance:
- Income corresponding to debt write-downs or delayed payments as a consequence of a creditor arrangement. It will include only that portion of the taxable amount falling within the tax period.
- The amount corresponding to capital increase transactions or the entity’s own funds due to compensatory credits that do not have to be included within the taxable amount due to the application of article 17.2 of the LCT.
- For partially exempt entities, only the positive balance from non-exempt income will be taken into account.
- Regarding entities to which a bonus is applicable for providing local public services, the balance will be taken from income to which a bonus is not applicable.
- Entities benefiting from the special tax regime of Law 49/2002.
- Entities that are taxed at 1%.
- Pension funds.
- SOCIMI.
For more information about this new development, or any other aspect relating to your company’s tax policy, do not hesitate to contact Henry Towers' tax experts, who will be able to assist you in any matter regarding your corporate taxes.