It is important that you check the turnover of your company before the end of the year, as it can affect its taxation in several taxes, and involve changes in tax obligations.
When we talk about the turnover of a company or company, there is no doubt that for tax purposes it has a decisive importance, since if certain limits are exceeded, their tax obligations can be modified.
In order to comply with the tax obligations that every company must present to the Tax Administration, invoicing will be one of the key elements to take into account, since depending on the size of your company, some tax commitments or others will be applied.
What is turnover?
The tax regulations do not expressly define the concept of turnover, however, given the supplementary nature that the rules of common law have in the tax field, the amount within the turnover is defined in the commercial regulations; specifically in the General Accounting Plan. The Resolution of the Institute of Accounting and Auditing of Accounts (ICAC) of 16 May 1991 establishes the general criteria for determining the composition of the net amount of turnover.
A) Positive components:
- The amount of sales and provision of services derived from the ordinary activity of the company carried out regularly.
- The acquisition price or cost of production of the goods or services delivered in exchange for non-monetary assets, or as consideration for services that represent expenses for the company.
- It does not include products consumed by the company itself or work done for itself.
- Financial income and subsidies are not included, except when they are awarded on the basis of the units of products sold and are part of the selling price of the goods and services.
B) Negative components:
- The amounts of sales returns.
- The “rappels” about sales or provision of services.
- The commercial discounts that are made on the income object of computation in the annual turnover.
In the case of groups of companies, the net turnover shall relate to all the undertakings belonging to the group as a whole. The same criterion applies in the case of related companies.
According to the General Accounting Plan, the Net Amount of Turnover (INCN) consists of the following accounts: (700), (701), (702), (703), (704), (705), (706), (708) and (709).
It is not necessary to take into account, for the computation, the income that comes from:
- Non-commercial swaps.
- Fixed asset swaps.
- Capital grants.
- Value Added Tax.
- Excise Duties.
- Financial institutions, except credit institutions
“Turnover” is considered the usual sales of goods and services (excluding VAT and considering in negative sales returns, rappels and discounts granted). It does not include, therefore, sales of assets, investment grants or financial income.
From a tax perspective, turnover affects the scope of various taxes, mainly to determine certain particularities in their scope of application. specifically:
- IAE: If it reaches one million euros of turnover, your company will no longer be exempt from the Tax on Economic Activities, so you must assume the cost that, according to the activity carried out, the municipality and the surface of its premises, determine the rates of the tax.
- Monthly declarations and VAT: If your trading volume exceeds 6,010,121.04 euros, you must submit monthly self-assessments of withholdings and VAT. In addition, and with respect to this last tax, you must comply with the obligations derived from the Immediate Supply of Information system (for example, provide the Treasury with the data on your invoices issued within four days of their issuance).
- Corporate Income Tax: If your turnover exceeds 6,000,000 euros, you must make the fractional payments according to the basic system (calculating the accumulated profit, and not according to the fee paid the previous year). And if it reaches 10,000,000 euros, it will no longer be able to apply the SME regime, a regime that includes various incentives not applicable to large companies.
– Entities with INCN from 20 million euros, in the 12 months prior to the first year 2018, will be limited to the compensation of negative tax bases and the reversal of certain tax credits to 50 or 25% of the tax base prior to the reduction by capitalization reserve depending on whether they do not reach 60 million or exceed that figure, respectively, being able to compensate the minimum amount of 1 million euros.
– Also when the entity has reached in the previous 12 months an INCN of at least 20 million euros, the amount of the application of deductions for internal and international double taxation generated in the year or pending from previous periods is limited to 50% of the full quota.
– It is the reference that determines whether the transactions carried out between related parties should be documented and whether this documentation must be complete, simplified or provide the information country by country.
– It is the amount on which the total amount of the expenses for attention to customers or suppliers that are deductible is fixed. We remind you that the tax deduction of expenses for this concept is limited to 1 per 100 of the INCN.
- Personal Income Tax: One of the three systems allowed within this tax for the calculation of net income from economic activities is the “simplified direct estimation” regime. It is a modality of direct estimation, of a voluntary nature, which is applied when the economic activities of the taxpayer meets, among other requirements, that the net amount of turnover, for all the activities carried out by him, does not exceed 600,000 euros per year in the immediately previous year.
- Retention of corporate administrators: A fixed withholding of 35% is applied to the remuneration paid by the status of administrator (a percentage that is reduced to 19% for companies whose net turnover of the previous year is less than 100,000 euros).
If you have any questions about all these types of taxes, you can contact any of our advisors to help you solve it.