The limits relating to the total income obtained from all economic activities and by volume of purchases are raised.
Among the main new features introduced in Law 48/2015 of October 29, on the General State Budget for the year 2016, it is worth highlighting the increase, on a temporary basis for the years 2016 and 2017, of the amounts of certain magnitudes whose exceedance implies exclusion from the objective estimation regime (modules).
The exclusion limits for the objective estimation method approved in Law 26/2014 of November 28 (Personal Income Tax reform) are extended, and their entry into force is postponed to 2018. This means that a greater number of self-employed individuals will be able to continue paying taxes under the objective estimation method (modules) in 2016 and 2017, if they find it advantageous.
A few months ago, an article was published on the Àmbit blog explaining the exclusion limits for the objective estimation method approved by Law 26/2014 (read the article " Exclusion from the objective estimation method (modules). The Administration limits the application of this special regime to retail activities or those directed at individuals"). The limits set out in the aforementioned article will apply from the 2018 tax year onwards.
Exclusion limits for 2016 and 2017
The objective estimation method may not be applied when:
• The total revenue from all economic activities in the immediately preceding year exceeds the limit of €250,000 per year. For this purpose, all transactions will be counted, regardless of whether or not there is an obligation to issue an invoice for them.
· Notwithstanding the foregoing, the limit will be 125,000 euros for all transactions for which there is an obligation to issue an invoice because the recipient is a businessperson or professional acting as such.
· The volume of purchases of goods and services, excluding acquisitions of fixed assets, in the previous year exceeds the amount of 250,000 euros annually.
Exclusion limits as of 2018
The objective estimation method may not be applied when:
• The total revenue in the immediately preceding year from all economic activities, excluding agricultural, forestry, and livestock activities, exceeds the limit of €150,000 per year. For this purpose, all transactions will be counted, regardless of whether or not there is an obligation to issue an invoice for them.
· Notwithstanding the foregoing, the limit will be 75,000 euros for all transactions for which there is an obligation to issue an invoice because the recipient is a businessperson or professional acting as such.
· The total income from all agricultural, livestock and forestry activities exceeds 250,000 euros annually.
· The volume of purchases of goods and services, excluding acquisitions of fixed assets, in the previous year exceeds the amount of 150,000 euros annually.
What to consider when calculating these limits
All income from the previous year is taken into account, including all transactions regardless of whether or not there is an obligation to issue an invoice. Therefore, to remain under the simplified tax regime in 2016, annual sales for all business activities in 2015 must not exceed €250,000, sales for all transactions with other businesses or professionals must not exceed €125,000, or purchases of goods and services must not exceed €250,000.
· For the calculation of income and expenses, VAT and the equivalent surcharge levied on the transaction are not taken into account.
· To calculate the total annual income, sales of investment goods (sales of vehicles, sales of real estate, etc…), current or capital subsidies, and compensation are not taken into account.
• To calculate the annual spending limit, all current business expenses will be taken into account, in addition to salaries, social security contributions, insurance, etc., from the previous year. However, acquisitions of capital goods (vehicles, warehouses, etc.) will not be included
Simplified VAT Regime
Furthermore, in accordance with the aforementioned transitional regime concerning the limits for the application of the objective estimation method in Personal Income Tax in the 2016 and 2017 tax years, a transitional regime is incorporated relating to the limits that determine the exclusion of the special regimes in Value Added Tax linked to the aforementioned method.
Recommendations
If you are currently included in the module system, we advise you to visit our offices during these last 2 months of 2015 to review your figures and forecast your income, expenses and services to determine if you can continue in the objective estimation system and the special simplified VAT system in 2016.
You can contact us via our email (ambit@ambitassessor.com) or at our offices.
Maribel Isart Llorente – Accounting and Tax Area
DON'T FORGET TO VISIT:
Follow all our news, and discover even more about us on our social media channels.
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
