There is no doubt that in the final part of the year, it is highly advisable to estimate the Corporate Income Tax (CIT) and Personal Income Tax (PIT) settlements before the end of the fiscal year. This allows you to obtain an approximate idea of the tax bill for the current year, enabling you to take appropriate action. The goal is to optimize your tax liability before it becomes due on December 31st. To this end, we help you carry out your tax and accounting closing procedures with maximum guarantees and efficiency.
The end of 2025 is approaching, and we undoubtedly need to review our tax and accounting practices in order to optimize our tax bill as much as possible.
Now is the time to properly apply and understand the tax regulations for the fiscal and accounting closing of the year 2025, taking advantage of the options offered by the different taxes, especially Corporate Income Tax and Personal Income Tax for companies, entrepreneurs and professionals.
Please note that this year 2025 is shaping up to be a year that will offer many new developments, stemming from both the "regulatory package" approved by the legislator and the regulations that are currently being processed for approval or that have been announced by the Government.
Some years close on their own, while others demand attention down to the last accounting entry. 2025 belongs to the latter group. It's not enough to simply balance the books and submit the documentation to the Mercantile Registry: this fiscal year brings significant changes to Corporate Income Tax, a reformulation of incentives, and a new framework that rewards capitalization and job stability.
With regard to Corporation Tax, in addition to analyzing and reviewing accounting criteria and possible differences (permanent or temporary) with the tax criteria of the Tax regulations, we cannot forget some of these new developments for this year-end closing:
The capitalization reserve. The flagship incentive is being strengthened. Starting in 2025, the general reduction will increase from 15% to 20% of the increase in equity. But the real innovation lies in its link to job creation. Companies that increase their average workforce by between 2% and 5% will be able to apply a 23%; if the growth is greater, up to 30%. Furthermore, the period for maintaining the reserve and equity is reduced from five to three years, a change that provides relief to SMEs that need flexibility.
Lower tax rates for small businesses. Micro -enterprises (those with a turnover of less than one million euros) will benefit from a more favorable tax scale:
- Up to €50,000 of taxable base: 17 %.
- Remaining taxable base: 20 %.
Small-sized entities ( SMEs) will apply a general rate of 20% , compared to the previous 25%.
This is no small change: for many law firms and small companies, it represents a real tax break. Furthermore, the law provides for a gradual reduction in tax rates until 2028.
Minimum taxation adapted to the new rates. For groups and large companies, the obligation to pay at least 15% of the positive taxable base remains in effect. However, in the case of micro-enterprises, the percentage is adjusted to the new reduced rates using the formula 15/25, rounding up.
Limits reintroduced for large companies. Law 7/2024 restores to the legal system the limits that the Constitutional Court had annulled on procedural grounds. Hereinafter:
- Companies with a turnover between 20 and 60 million euros will only be able to offset 50% of their taxable base with BIN or deductions.
- Those exceeding 60 million will have a limit of 25%.
Furthermore, the rule that requires tax groups to integrate only 50% of the individual negative bases of their entities is extended to 2024 and 2025.
Green investments and accelerated depreciation. Although Royal Decree-Law 9/2024 was not ratified, its provisions remained in effect and could be reinstated.
The regulation allowed for accelerated depreciation of investments in self-consumption of energy and renewable energy, up to a limit of €500,000 and conditional on maintaining the workforce.
Electronic Billing Systems (SIF) and VERI*FACTU. New mandatory electronic invoicing system: From January 1, 2026, for companies and July 1, 2026, for the self-employed, it will be mandatory to use approved software that issues invoices with traceability, digital signature, and QR code, sending the data to the Tax Agency in real time. Penalties for non-compliance can reach €50,000, so 2025 should be used to adapt systems and train teams.
Although the 2025 Corporate Income Tax for entities whose fiscal year coincides with the calendar year will be self-assessed in July 2026, the expense for profit tax will have to be recorded at the end of this fiscal year and, therefore, this will require calculating the tax payable and making all the adjustments to the accounting result, quantifying the capitalization reserve, deciding on the compensation of negative tax bases or determining the amount of the deductions.
From an accounting perspective , it is important to detect if anything is missing from the accounting records and correct errors, reclassify account balances based on their due date, etc.
Remember that we must manage the processes for calculating the accounting profit and the taxable base for Corporation Tax, making the necessary accounting and non-accounting adjustments. We will also delve into the tax advantages you can obtain by applying the regulations. To do this, we will analyze all the items involved in the year-end closing procedures, including the different special tax regimes and the differences for self-employed individuals and professionals.
Beyond the regulations, the closing process is an exercise in meticulous review. These are the aspects that usually make the difference between an orderly closing and one full of subsequent adjustments:
- Offsetting negative tax bases (NTBs): It is necessary to check outstanding balances and apply the limits correctly. NTBs are a tax asset that can be lost if not managed in a timely manner.
- Deductions for double taxation: with the new limits of 50%, it is advisable to recalculate them and not leave any unapplied.
- Fiscal reserves: both the capitalization reserve and the leveling reserve must be accounted for, with the specific entry and account in the balance sheet.
- Related party transactions: documenting and valuing all transactions with partners, subsidiaries or administrators is essential to avoid subsequent adjustments.
- Investments and amortizations: review whether there are assets with applicable tax benefits, especially those related to innovation or energy efficiency.
- Maintaining employment: monitoring average staffing levels and keeping hiring records, because it directly affects tax incentives.
- Minimum taxation: ensure that the new rates and rounding are applied correctly, especially in companies with reduced profits.
Practical recommendations before closing
- Anticipate the calculations. Don't wait until the end of the year to find out your tax bill. A preliminary estimate in November allows for some flexibility.
- Aligning accounting and taxation. Accounting results must accurately reflect economic reality, but also comply with tax regulations.
- Document every decision. Reserves, deductions, or provisions need supporting documentation. An internal report, minutes, or certification is worth more than a thousand verbal justifications.
- Review the consistency between fiscal years. Many pending adjustments or deductions originate from previous years. Checking data traceability prevents accumulated errors.
- Coordinate departments. Closing the books isn't just the responsibility of the accounting department: management, the tax advisor, and, if applicable, the external auditor must all be involved.
Regarding personal income tax for business owners and professionals, we cannot forget some new developments as this year draws to a close:
- Taxpayers under the simplified tax regime ("Modules"): The exclusion thresholds for the simplified tax regime are extended to 2025 (the amounts of €250,000 and €125,000), and the general reduction on net income under the simplified tax regime remains at 5%. Furthermore, the exceptional measures for agricultural and livestock activities that were applicable in 2022, 2023, and 2024 (reduction of net income by 35% of the purchase price of agricultural diesel and by 15% of the purchase price of fertilizers) are eliminated. The adjustment factors for activities such as table grapes, flowers and ornamental plants, and tobacco (0.32 and 0.26, respectively) are maintained. The adjustment factors of 0.50 for animal feed purchased from third parties and 0.75 for crops on irrigated land using electricity are also maintained.
- Severance payments. Effective April 3, 2025, it is clarified that severance payments will not be exempt from Personal Income Tax (IRPF) if they arise from a prior agreement, contract, or other agreement. However, an exception is made for agreements reached before an administrative body as a preliminary step to legal proceedings, which will be eligible for the tax exemption.
- Alimony payments received from parents. Effective April 3, 2025, alimony payments established through settlement agreements pursuant to Article 90 of the Civil Code will be exempt from Personal Income Tax (IRPF). This includes: (i) Agreements formalized before a court clerk; (ii) Agreements formalized as a public deed before a notary.
- New reduction for income derived from certain artistic activities obtained on an exceptional basis. Effective from January 1, 2025, a new 30% reduction is established for income derived from certain artistic activities (classified as employment income or income from economic activities) obtained on an exceptional basis. For the reduction to apply, the amount of the aforementioned income must be significantly higher than the average of the three preceding tax years. Specifically, this income must exceed 130% of the average amount of income that, meeting the aforementioned requirements, has been reported in the three preceding tax years. A maximum limit of €150,000 per year is established for the reduction base.
- New increase to the maximum marginal tax rate applicable to the taxable base of savings. This change takes effect from 1 January 2025. The maximum marginal tax rate is increased by 2%, from 28% to 30%. This higher rate applies to the portion of the taxable base of savings that exceeds €300,000.
- MOVES III 2025: extended and retroactive deductions. State deduction of 15% for electric vehicles (base limit €20,000) and charging points (base limit €4,000), with retroactive effects from 1-1-2025.
- Low incomes, new state deduction. Up to €340 for workers with employment income ≤ €18,276 and little additional income; it is deducted directly from the total net tax liability.
- Self-employed reminder (impact 2026) Veri*Factu. In 2025 it is advisable to prepare systems: from 1-1-2026 (companies) and 1-7-2026 (self-employed/CB) it will be mandatory to have approved software with chaining, signing and sending in real time.
Other aspects to consider when closing the personal income tax return
- Contribute to your pension plan. Make contributions before closing: up to €1,500 (€8,500 if there is an employer contribution and +€4,250 if you are self-employed).
- Advance deductible expenses. Pay for repairs, supplies, or depreciation before December 31st to reduce your net business income.
- Invest in energy efficiency. Complete projects or improvements that reduce energy consumption before the new year to qualify for deductions of 20%, 40%, or 60%.
- Plan your compensation. Receive part of your salary in kind, tax-exempt: meal vouchers (€11/day), transportation allowance (€1,500/year) or mileage reimbursement (€0.26/km).
- Offset losses. If you've had capital gains, sell loss-making assets before the end of the year to offset those gains.
- Purchase an electric vehicle or charging point. If you buy before December 31st, you can apply the 15% deduction (limit €20,000 or €4,000 for charging points).
- Advance rental or maintenance expenses. If you have rental properties, pay deductible expenses (property tax, repairs, insurance) in 2025 to reduce net income.
- Reinvest in your primary residence. If you have sold your home, reinvest within two years, but if possible, make the purchase before December 31st to avoid missing the deadlines.
- Invest in companies or startups. Formalize the investment before the end of the year to apply the 50% deduction on a base of €100,000.
- Donate before closing time. Donations made before December 31st qualify for a 40% deduction (or 50% for recurring donations).
- Change your tax method if it suits you. If you are currently on the simplified tax regime and want to switch to direct estimation in 2026, submit your resignation in December 2025.
- Formalize your grants or subsidies. If you have received grants, consider reporting only the proportional amount before closing to avoid tax rate jumps.
- Regularize your advances or collections. Invoice or register outstanding income as appropriate for tax purposes for the 2025 fiscal year.
- Update your billing software. Adapt it to Veri*Factu before July 1, 2025; take advantage of the year-end to review internal processes.
- Settle outstanding invoices. Avoid having unpaid expenses recorded—especially if you pay taxes on a cash basis—before the closing date.
- Pay your social security contributions. Make the payments before December 31st to be tax-deductible for the fiscal year.
- Contribute to your spouse's pension plan. If you earn less than €8,000, you can contribute up to €1,000 and reduce your taxable income.
- Formalize a lifetime annuity (for those over 65). If you have sold an asset, establish the lifetime annuity within six months to avoid paying tax on the gain.
- Apply reductions for new business start-up. If you started business in 2025, check that the 20% reduction is calculated on the final positive return.
- Verify spending limits for supplies and living expenses. Close the year with electronic receipts for expenses such as water, electricity, internet, and meals during working hours.
- Take advantage of the geographical mobility tax credit. If you have moved for work, document the change of residence before the end of the year to claim the additional €2,000 expense.
- Formalize new rental agreements. If you rent a new home in a high-demand area before December 31, apply the 70% or 90% reduction in 2025.
- Deductions: Take advantage of deductions for investment in your primary residence (for taxpayers who acquired their primary residence or paid amounts towards its construction before January 1, 2013), for renting your primary residence (taxpayers with a lease agreement prior to January 1, 2015), donations, actions for the protection of Spanish Historical Heritage and World Heritage, for investment in newly created or recently established companies, for income earned in Ceuta and Melilla, for carrying out economic activities, for large families or dependents with disabilities, or the maternity deduction, as well as the 20%, 40%, or 60% deductions for works on homes and residential buildings that improve energy efficiency and the exclusion from taxation of certain subsidies and grants for rehabilitation. It is very important that you do not forget to verify the deductions offered by the applicable regulations depending on the Autonomous Community where you are a tax resident.
- Wealth Tax: Remember that the tax's validity is established indefinitely. However, this is a modification at the national level, so the regulatory powers of the Autonomous Communities must be taken into account.
- Temporary Solidarity Tax on Large Fortunes: Remember that this tax (Form 718) is a direct, personal tax that complements the Wealth Tax and is levied on the net worth of individuals exceeding €3 million. It accrues on December 31st of each year, and therefore, the amount of net worth, as well as compliance with the requirements and conditions for determining the taxable base, must be verified by that date.
All of this is without prejudice to the new regulations established by the respective Autonomous Communities and the regional regulations of the Basque Country and Navarre, which must be taken into account for tax residents in these territories, such as in relation to new or modified regional rates and whether new deductions have been established or some of the existing ones modified.
You can contact this professional office for any questions or clarifications you may have in this regard, in order to help you carry out your tax and accounting closing operations with the maximum guarantees and efficiency.
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A Àmbit Assessor, SL has 40 years dedicated to the tax, comptable and labor consultancy of the Pime.
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