If the fiscal year coincides with the calendar year, the filing period for 2019 will be from July 1 to 25, 2020 (this year, since July 25 falls on a Saturday, the deadline is July 27) for entities whose 2019 tax period coincides with the calendar year. If the tax payment is made by direct debit, the deadline for setting up this direct debit is from July 1 to 20, inclusive. However, due to COVID-19, a second self-assessment of Corporate Income Tax may be filed until November 30, 2020.
We would like to remind you that the tax return filing period is upon us once again, and the CORPORATE TAX CAMPAIGN for the 2019 tax year is beginning.
The Tax Office doesn't forgive. Despite the state of emergency due to the COVID-19 coronavirus, once again, corporate taxpayers must fulfill their tax obligations to the Tax Office. The coronavirus crisis has disrupted the economy and social life of citizens, but the annual appointment with the Tax Office will remain unchanged, as the deadlines for filing the Corporate Income Tax (CIT) return are not interrupted.
However, it should be noted that Royal Decree-Law 17/2020, which adopts supplementary tax measures effective from May 28, 2020, was published in the Official State Gazette (BOE) on May 27. Among these measures, it establishes that the three-month period for preparing annual accounts and other legally required documents will be calculated from June 1, 2020 (and not from the end of the state of emergency), and reduces to two months the period for approving annual accounts from the end of the preparation period. This means that companies will have approved accounts filed with the Mercantile Registry sooner, and the deadline is harmonized for all companies, whether listed or not, so that all must have their accounts approved within the first ten months of the financial year.
Well, it should be noted that the Mercantile Registry published a notice on its website on May 28, 2020, regarding the legalization of books and the filing of accounts corresponding to the financial year ending December 31, 2019.In it, it states that, in accordance with Final Provision 8 of Royal Decree-Law 19/2020, of May 26 (Official State Gazette 05/27/2020), which amended sections 3 and 5 of article 40 of Royal Decree-Law 8/2020, the deadlines for submitting the legalization of books and the Annual Accounts within the established timeframe are as follows:
• Preparation of annual accounts: A period of three months from June 1st is established to prepare the annual accounts for the 2019 financial year. Consequently, the deadline for preparing the Annual Accounts would be August 31st, 2020.
However, nothing prevents the preparation of the Annual Accounts during the State of Emergency.
• Deadline for submitting the legalization of the books: September 30.
• Deadline for holding the Ordinary General Meeting to approve the accounts and the allocation of profits: October 31.
• Deadline for filing the Annual Accounts: One month from the date of the Annual Accounts approval meeting (October 31). (If the deadline is met and the meeting is held on October 31, the deadline will be November 30.)
Notwithstanding the foregoing, the accounts may be prepared during the State of Alarm, as well as their accounting verification within the legally established period, and deposited in the Registry within the ordinary period.
In accordance with the new deadlines for the preparation and approval of the annual accounts, a second self-assessment of Corporate Income Tax may be submitted until November 30, 2020.
Nevertheless, the deadline generally remains within 25 calendar days following the six months after the end of the tax period (this year, since July 25th falls on a Saturday, the deadline is July 27th) for entities whose 2019 tax period coincides with the calendar year. However, if the tax period coincides with the calendar year, and the tax debt payment is made by direct debit, the deadline for setting up this direct debit is from July 1st to July 20th, 2020, inclusive. This can be done through the deposit institution acting as a collaborator in the tax collection process (bank, savings bank, or credit union) located in Spain where the account for the direct debit is held in the entity's name. In the case of direct debit payments, the payments are considered to have been made on the date of the direct debit payment, and the receipt issued by the deposit institution is considered proof of payment.
Taking into account the above, in the tax field,Royal Decree-Law 19/2020 has modified the system for submitting Corporate Income Tax returns for the years beginning in 2019 for those taxpayers whose deadline for the preparation and approval of the annual accounts for the year has been adjusted to the provisions of the aforementioned articles 40 and 41 of Royal Decree-Law 8/2020 (modified, as we have indicated, by Royal Decree-Law 19/2020).
The new element is that if, by July 25, 2020, the entity had approved accounts - which can happen without breaching any deadline as seen in the commercial modifications - that declaration will be made with the "available annual accounts" which, in listed companies, will be the audited accounts and, for all others, will be the audited accounts - if the case - or the prepared accounts but, if they have not yet been prepared - which is also possible as we saw because the deadline ends on August 31 - with the accounting kept in accordance with the Commercial Code.
However, if the approved accounts are different from those used in the declaration, the entity will submit a new one, no later than November 30, 2020.
Features of the new self-assessment:
• If the new return results in a higher amount payable or a lower amount refundable than the first, it is considered a supplementary return, and late payment interest will accrue on that amount from the end of the deadline for the "normal" return—generally from July 25.
• If the result is a lower amount payable or a higher amount refundable, it will be considered a correction of the first return, but without the effects of amended self-assessments—no late payment interest will accrue on the difference from the filing date, and the procedure established for such amendments in Articles 126 et seq. of the Tax Implementation Regulations will not apply.
• In the new self-assessment, options can be modified or exercised as in any return filed on time. For example, even if negative tax bases were not offset in the July return, they can be offset in the November return, and the Tax Administration cannot dispute this.
• The six-month period after which late payment interest accrues, if the amount due from the self-assessment has not been paid, will begin on November 30, 2020. Therefore, if a refund is due from this second self-assessment, late payment interest will begin to accrue on June 1, 2021.
• As an exception to the above, if the second return corrects the first one resulting in a refund because payment was actually made in the first return, late payment interest on the refund will accrue from the first due date—generally July 25. • It is
clarified that both returns may be audited by the Tax Authorities.
Main new features
This campaign presents some new features and formal obligations that we should be aware of.
The 2019 tax year, which we must now declare in 2020, is marked by the approval of several regulations affecting the Corporate Income Tax return, most notably the ICAC Resolution of March 5, 2019 , which came into effect in 2020. This commercial regulation will affect the tax when certain transactions are carried out with financial instruments or when the profit is allocated to different accounts. Furthermore, we must consider the impact of COVID-19 on the preparation of annual accounts and its effects on the Corporate Income Tax return.
Among other changes to consider when filing your Corporate Income Tax return are: the reduction of income from certain intangible assets, known as the Patent Box, with a new transitional regime for this incentive; modifications to the country-by-country reporting requirements to improve the alignment of the Corporate Income Tax Regulations; and, regarding withholding taxes, a new exception to the withholding obligation has been established for payments made to pension funds by open-ended pension funds. The deduction for investments in Spanish feature film and audiovisual series productions has also been modified, as has the deduction for expenses incurred in Spain during the production of foreign feature films or audiovisual works. Finally, the deduction for job creation linked to open-ended contracts supporting entrepreneurs has been eliminated.
Through this letter we wish to inform you of all of this, without prejudice to the deadlines for submitting declarations established by the Autonomous Communities of the Basque Country and Navarre.
As in the previous year, there is an individual tax return (Form 200) , which includes additional information requests and continues to represent a significant extra workload. Furthermore, there is a specific tax return form for tax groups : Form 220.
Remember that it will be mandatory for taxpayers to submit Forms 200 and 220 electronically via the Internet , regardless of the form or name adopted by the taxpayer.
Attention. Regarding the completion of Form 200, please note that the PADIS assistance program for Form 200 has been unavailable since July 1, 2019, and has been replaced by a help form (Sociedades web).
Who is subject to Corporation Tax?
Tax liability is determined by residence in Spanish territory. Entities meeting any of the following requirements will be considered resident in Spanish territory:
1. That they have been incorporated under Spanish law.
2. That they have their registered office in Spanish territory.
3. That they have their place of effective management in Spanish territory.
For these purposes, an entity will be considered to have its effective management headquarters in Spanish territory when the management and control of all its activities is located there.
The Tax Administration may presume that an entity based in a country or territory with zero taxation or considered a tax haven has its residence in Spanish territory when its main assets, directly or indirectly, consist of goods located or rights that are fulfilled or exercised in Spanish territory, or when its main activity is carried out therein, unless said entity proves that its management and effective administration takes place in that country or territory, as well as that the constitution and operation of the entity responds to valid economic reasons and substantive business reasons other than the simple management of securities or other assets.
Specifically, the following will be taxpayers of the Tax, when they have their residence in Spanish territory:
All kinds of entities, whatever their form or name, provided that they have their own legal personality, except for civil companies that do not have a commercial purpose.
These include, among others:
• Civil partnerships with a commercial purpose
• Commercial companies: public limited companies, private limited companies, general partnerships, worker-owned companies, etc.
• State, regional, provincial, and local companies.
• Cooperative societies and agricultural transformation companies.
• Sole proprietorships.
• Economic interest groupings.
• European economic interest groupings.
• Associations, foundations, and institutions of all types, both public and private.
• Public entities (State Administrations, Regional Administrations, Local Corporations, Autonomous Agencies, etc.).
In addition, the following entities, lacking their own legal personality:
• Investment funds regulated by the Collective Investment Institutions Act.
• Temporary business associations.
• Venture capital funds. •
Pension funds.
• Mortgage market regulation funds. •
Mortgage securitization funds. •
Asset securitization funds.
• Investment guarantee funds.
• Communities that own communal forests.
• Bank Asset Funds.
Taxpayers will be taxed on all income they receive, regardless of where it was generated and regardless of the payer's residence.
Who is required to file a Corporate Income Tax return?
All taxpayers subject to Corporation Tax are required to file the Corporation Tax return, regardless of whether they have carried out any activities during the tax period and whether or not they have obtained income subject to the tax.
Therefore, circumstances such as the entity remaining inactive or, if active, not generating taxable income, do not exempt the taxpayer from the obligation to submit the required declaration.
Specifically, non-profit entities, professional associations, business associations, official chambers, workers' unions and political parties, among others, will be required to declare all of their income, both exempt and non-exempt.
The only exceptions to the general obligation to file a tax return are as follows:
• Entities declared fully exempt under Article 9.1 of the Corporate Income Tax Law or to which the regime of this article applies.
• Entities partially exempt as referred to in Article 9.3 of the Corporate Income Tax Law that meet the following requirements:
• Their total income does not exceed €75,000 per year.
• Their income from non-exempt sources does not exceed €2,000 per year.
• All non-exempt income they receive is subject to withholding tax.
• Communities that own communal forests for those tax periods in which they have no income subject to Corporate Income Tax, incur no expenses, and do not make the investments that entitle them to the reduction in the taxable base specifically applicable to these taxpayers.
Attention. Please note that civil partnerships with legal personality and a commercial purpose, which were previously taxed under the income attribution regime in the Personal Income Tax (IRPF), will now be subject to Corporation Tax. However, civil partnerships engaged in agricultural, livestock, forestry, fishing, mining, and professional activities, as defined in Law 2/2007 on professional partnerships, will continue to be taxed under the IRPF.
What is the tax period and the accrual of the tax?
General rule
The tax period, to which the Corporate Income Tax return must refer, coincides with the financial year of each entity.
Specific Rules.
Even if the fiscal year has not ended, the tax period is considered concluded in the following cases:
• When the entity is dissolved. Dissolution is considered to have occurred when the company's cancellation is recorded in the Commercial Registry, and the entity is therefore obligated to file its tax return within 25 calendar days following the six months after said cancellation entry.
• When the entity changes its tax residence from Spain to a foreign country.
• When the legal form of the entity is transformed, resulting in the resulting entity no longer being subject to Corporation Tax.
• When the legal form of the entity is transformed, resulting in a change to its tax rate or the application of a special tax regime.
In no case may the tax period exceed twelve months.
In summary:
The duration of the tax period can be:
• Twelve months
1. coinciding with the calendar year
2. not coinciding with the calendar year
• Less than twelve months.
In any case, corporate income tax payers must file a separate return for each tax period.
Regarding accrual, corporate income tax accrues on the last day of the tax period.
Main changes for the 2019 tax return
The 2019 tax year, which companies are now required to declare, is, from a tax perspective, an atypical year because hardly any significant regulations affecting this tax have been approved. The scarcity of published tax regulations has become common in recent years, especially when compared to previous years.
However, the 2019 tax year, which we must declare now in 2020, is marked by the approval of various regulations that affect the declaration of Corporate Income Tax, all without prejudice to the filing deadlines and peculiarities of the declarations established by the Autonomous Communities of the Basque Country and Navarre.
The 2019 fiscal year, which we must now declare in 2020, is marked by the approval of several regulations affecting the Corporate Income Tax return, most notably the ICAC Resolution of March 5, 2019, which came into effect in 2020. This commercial regulation will affect the tax when certain transactions are carried out with financial instruments or when the profit is allocated to different accounts. Furthermore, we must consider the impact of COVID-19 on the preparation of annual accounts and its effects on the Corporate Income Tax return. Following the declaration of the state of emergency, one of the measures incorporated through Royal Decree-Law 8/2020 of March 17, on urgent extraordinary measures to address the economic and social impact of COVID-19, was the suspension of the deadline for preparing annual accounts, which has now also been modified, as we have already mentioned, by Royal Decree-Law 19/2020 of May 26.
We also cannot forget that Law 6/2018 of July 3, the General State Budget Law, which introduced changes to the Tax, has been extended to 2019. Specifically, the reduction of income from certain intangible assets, the so-called Patent Box, has been modified again, and a new transitional regime for this incentive has been added. An exemption for certain income obtained by Port Authorities has also been established, effective for tax periods beginning in 2017 and later. Royal Decree 17/2018 has also amended Article 15 of the Tax Law, effective for tax years beginning on or after November 10, 2018, to prevent lenders from deducting the tax debt for Documented Legal Acts in mortgage loan transactions.
On the other hand, we must also take into account Law 8/2018, of November 5, which modifies Law 19/1994 modifying the Economic and Fiscal Regime of the Canary Islands, which makes several modifications that affect the regulation of the Reserve for investments in the Canary Islands -RIC- and Royal Decree-Law 27/2018, of December 28, which adopts certain measures in tax and cadastral matters, which introduced modifications approved by Circular 4/2017, of November 27, of the Bank of Spain, to credit entities, on public and reserved financial information standards, and financial statement models.
From an accounting perspective, this also includes a significant extra effort by the ICAC, which has issued a large number of consultations aimed at clarifying some of the most complex issues in the application of the General Accounting Plans, as well as new Resolutions of interest for this declaration.
In order to provide you with better service, please prepare the necessary documentation as soon as possible and request a date and time to review it together.
Please have the following documentation ready:
✔ Annual accounts 2019: these will contain the basic information that must be incorporated into the Corporate Income Tax model.
Attention. Following the declaration of the state of emergency, one of the measures incorporated through Royal Decree-Law 8/2020, of March 17, on urgent extraordinary measures to address the economic and social impact of COVID-19, is the suspension of the deadline for preparing annual accounts. With the deadline for preparation extended, it is important to bear in mind that estimates of the facts and circumstances existing at the closing date may be subject to more accurate estimation at the date on which the annual accounts are prepared, and it should not be ruled out that this date could be close to the current legal deadline for filing the tax return.
It should be noted that, since May 28, 2020, Royal Decree-Law 19/2020 establishes that the three-month period for preparing annual accounts and other legally required documents will be calculated from June 1, 2020 (and not from the end of the state of emergency). Furthermore, the period for approving the annual accounts is reduced to two months from the end of the preparation period.
In this regard, during the period of preparation of annual accounts, companies must decide whether the spread of COVID-19 should be understood as a "subsequent event" that should imply, or not, an adjustment in the magnitudes of their annual accounts.
✔ Corporate Income Tax returns from previous years: these will give us clues about differences between the taxable base and the accounting result that can be reversed in 2019, negative taxable bases that we can offset, balance of deductions not applied in the past that can be taken advantage of now, etc.
✔ 2019 declarations of other taxes so that we can reconcile them with the amounts stated in the Corporate tax return: VAT (annual summary), 190 withholdings, 180 withholdings for real estate rentals, 193 (annual summary of withholdings on movable capital), etc.
✔ Installment payments for 2019.
✔ Certificates: of withholdings on real estate leases, on income from movable capital received, from entities under the income attribution regime, if the company is a participant or joint owner, or of donations made during the year and of donations, etc.
With no further remarks, we greet you most cordially,
Do you have any questions about this topic?
Our team of expert advisors will help you resolve any issues related to our services.
Contact us now
A Àmbit Assessor, SL has 40 years dedicated to the tax, comptable and labor consultancy of the Pime.
Latest entries from MGI Àmbit
(see all)
Related
