On July 1, the Tax Agency will launch the Company Tax Campaign for the 2019 financial year which is conditioned, in addition to the special circumstances we have by COVID-19, by the commercial amendments approved with respect to the formulation and approval of Annual Accounts and, in line with this, the possibility of filing a second corporate tax return until 30 November 2020, if the finally approved annual accounts differ from the accounting information taken into account for the preparation of the voluntary declaration (which is maintained in voluntary periods (which is maintained as in previous years – until July 27 if the exercise is the calendar year).
Like all years for these dates, the beginning of the deadline for filing self- relaxation by corporation tax and non-resident income tax with permanent establishment is approaching.
Thus, on July 1, 2020, the Tax Agency will launch the Corporate Tax Campaign for the 2019 financial year, which is conditioned, in addition to the special circumstances that we have by COVID-19, by the commercial amendments approved with regard to the formulation and approval of annual accounts, in addition to other developments and formal obligations that we must know.
This Companies campaign – which for most entities will begin on 1 July – is conditioned by the approval of Royal Decree-Law 8/2020,of March 17 and Royal Decree-Law 19/2020of 26 May, that expanded the deadlines for formulating and approving annual accounts as a result of the health crisis. In line with this, the possibility of filing a second corporate tax return was regulated until 30 November 2020,if the finally approved annual accounts differ from the accounting information taken into account for the preparation of the return to be submitted in the voluntary period.
In this sense, the deadline for formulating annual accounts that would not have ended when the alarm status was declared – 14 March last year – ends september 1st and for those entities, the deadline for approval by the General Meeting of the accounts for the financial year november 1.
As the period for declaring corporation tax is 25 calendar days after 6 months after the end of the tax period, with the commercial deadlines established it could happen that certain entities had to file the self-taxation before they had approved their accounts. Despite this, the Government has decided not to alter the deadline for self-taxing,which will remain the aforementioned one – for entities with exercises coinciding with the calendar year from 1 to 27 July 2020, because 25 and 26 are days of age. However, if at the end of that period the entity has not approved accounts, that declaration will be made with the “annual accounts available” which will ultimately result from the accounting carried out in accordance with the Trade Code.
In the event that,finally, the approved accounts are different from those used in the declaration, the entity will present a new one –until 30 November 2020 at most – with such self-accuracy having very specific effects detailed by the rule.
The rest of the news of the campaign, beyond regulations, are management news.
The filing deadline
It is generally maintained within 25 calendar days of six months after the end of the tax period (this year being Saturday, July 25, the deadline ends on July 27),for entities whose 2019 tax period coincides with the calendar year.
However, if the tax period coincides with the calendar year, and the direct debit of the payment of the tax debt, the deadline for such direct debit andJuly 1-20, 2020, inclusive, although it may be done in the deposit entity acting as a contributor to the collection management (bank, savings bank or credit union) located in Spanish territory where the account in which the payment is domiciled is open in her name. In cases of direct debit, payments are understood to be made on the date of debit on the account of direct debits, with proof of income being deemed to be that issued by the deposit institution.
All this, without prejudice to the deadlines for the submission of declarations established by the Autonomous Communities of the Basque Country and Navarra.
Remember that it will be mandatory for taxpayers to file the Models 200 and 220via the Internet, regardless of the form or name adopted by the taxable person.
Impact of COVID-19 on annual accounts and corporation tax
With regard to the formulation, verification and approval of the annual accounts of the various companies and entities, Article 40 and 41 of Royal Decree-Law 8/2020of 17 March of extraordinary urgent measures to deal with the economic and social impact of COVID-19,and established an extraordinary regime. This extraordinary regime was later nuanced by the amendment introduced by the first final provision of Royal Decree-Law 11/2020 (published in the BOE on April 1).
Specifically in these regulations:
- (a) The three-month period since the end of the financial year for the formulation of annual accounts was set, which would resume for another three months from the end of the alarm status.
- In the event that the annual accounts were already formulated at the date of declaration of the alarm status, the period for verification by auditors was extended until two months after the end of the alarm status.
- Accordingly, deadlines for meetings of the regular general meetings of the approval of accounts (three months after the date on which the reporting period ended) were delayed; and if these had already been convened before the declaration of the alarm status and their date of celebration were later, you could change the venue and time of celebration or revoke the call.
- b) In the case of listed companies, stretched to six months since the end of the social year the obligation to publish and forward the annual financial report and annual audit report to the CNMV and it was established that the regular general meeting could be held within ten months of the end of the financial year. With effect from 28 May 2020, Royal Decree-Law 19/2020 provides that the three-month period for formulating annual accounts and other legally binding documents shall be calculated from 1 June 2020 (and not from the end of the alarm status). On the other hand, the deadline for approving annual accounts has been reduced to two months since the end of the deadline for their formulation.
Taking into account the above, in the tax field RDL 19/2020 has amended the filing regime for declarations Corporation Tax of the financial years initiated in 2019 for those taxpayers whose deadline for the formulation and approval of the annual accounts for the financial year has been in accordance with the provisions of Articles 40 and 41 of Royal Decree-Law 8/2020 (as amended, as we have indicated, by Royal Decree-Law 19/2020).
the novelty is that if by 25 July 2020 the entity had approved accounts – which may happen without breaching any time limit as seen in the commercial amendments – that statement will be made with the “annual accounts available” which, in listed, will be the audited accounts and, for all the others,it will be the audited accounts – if that is the case – or the accounts formulated but, if they have not yet been formulated – which is also possible as we saw because the deadline ends on August 31st– with the accounting carried out in accordance with the Trade Code.
However, if the approved accounts are different from those used in the declaration, the entity may submit a new one, until 30 November 2020 at most.
Features of the new self-accuracy:
- If it results in an amount to be paid greater or an amount to be repayed less than in the first, it is considered complementary, accruing for that amount late interest since the end of the term of the “normal” – usually from 25 July.
- If less amount is to be paid or more to be returned, rectification of the first amount shall be considered but without the effects of the amending self-settlements – without accrual of interest for delay for the spread from the date of submission and without applying the procedure laid down for them in Articles 126 and following of the Regulation implementing the taxes.
- In the new self-accuracy, options may be modified or options may be exercised as in any declaration submitted within the time limit. For example, even if no negative basis has been compensated in July, they can be compensated in November and cannot be discussed by the Administration.
- The period of 6 months from which interest for late payment accrues, if the amount to be refunded for the submission of the self-accuracy has not been effective, shall be counted from 30 November 2020. Therefore, if it results in an amount to be repayed from this second self- relaxation, the accrual of late interest shall com begin on 1 June 2021.
- By way of derogation from the foregoing, if the second declaration produces a correction of the first declaration with a result to be returned because it was actually entered in that first, the interest on late payment will accrue from the first period – in general, on 27 July.
- It is clarified that both statements may be checked by the Administration.
Who is subject to Corporation Tax?
The tax is determined by the residence in Spanish territory. Entities in which one of the following requirements is met shall be considered resident in Spanish territory:
- That they would have been constituted in accordance with Spanish law.
- Have their registered office in Spanish territory.
- Have the effective management headquarters in Spanish territory.
For this purpose, an entity shall be deemed to have its place of effective management in Spanish territory where it radiates the direction and control of all its activities.
The tax authorities may presume that an entity located in any country or territory of zero taxation or considered to be a tax haven has its residence in Spanish territory where its principal assets, directly or indirectly, consist of goods located or rights that are fulfilled or exercised in Spanish territory, or where its main activity takes place in that territory, unless that entity proves that its management and effective management 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 simple securities management or other assets.
Specifically, they will be taxpayers of the Tax, when they have their residence in Spanish territory: All kinds of entities, whatever their form or denomination, provided that they have their own legal personality, except civil companies that have no commercial object. These include, but are not, but are noted:
- Civil companies with commercial purposes
- Commercial companies: public limited liability, collective, labor, etc.
- State, regional, provincial and local societies.
- Cooperative societies and agricultural processing societies.
- Single-person societies.
- Economic interest groups.
- European economic interest groups.
- Associations, foundations and institutions of all kinds, both public and private.
- Public bodies (State Administrations, Administration of Autonomous Communities, Local Corporations, Autonomous Bodies, etc.).
In addition, the following entities, devoid of their own legal personality:
- Investment funds regulated in the Collective Investment Institutions Act.
- Temporary unions of companies.
- Capital-risk funds.
- Pension funds.
- Mortgage market regulation funds.
- Mortgage securitisation funds.
- Asset securitisation funds.
- Investment guarantee funds.
- The communities that own neighborhood mountains in common hand.
- Bank Asset Funds.
Taxpayers will be taxed for all income they obtain, regardless of where it occurred and whatever the payer’s residence.
Who is required to file the Corporation Tax return?
All taxpayers of the company tax are required to file their return on corporation tax, whether or not they have carried out activities during the tax period and whether or not taxable income has been obtained.
Consequently, circumstances such as the entity remaining inactive or that, having activity, have not been generated as a result of the same taxable income, do not exempt the taxpayer from the obligation to file the mandatory declaration.
Specifically, non-profit entities, professional colleges, business associations, official chambers, workers’ unions and political parties, among others, will be required to declare all their income exempt and not exempt.
As the only exceptions to the general obligation to declare, the current legislation provides for the following:
- Entities declared wholly exempted by Article 9.1 of the Corporation Tax Act or which apply to them under this Article.
- Partially exempted entities referred to in Article 9.3 of the Corporation Tax Act that meet the following requirements:
- That your total income does not exceed 75,000 euros per year.
- Non-exempt income does not exceed EUR 2,000 per year.
- That all non-exempt income they earn is subject to withholding.
- Communities holding neighbouring mountains in common hand for tax periods in which they do not have income subject to corporation tax, incur any expense, or make investments that entitle the reduction in the tax base specifically applicable to these taxpayers.
Please note that since 01 January 2016, civil companies withlegal personality and commercial subject matter, which had been taxing on income allocation basis in the IRPF, become contributors to corporation tax. However, civil companies engaged in agricultural, livestock, forestry, fisheries, mining, as well as professional companies within the meaning of Law 2/2007 of professional companies will continue to be taxed by the IRPF.
What is the tax period and the accrual of the tax?
The tax period, to which the company tax return is to be referred, coincides with the financial year of each entity.
> Particular rules
Even if the financial year has not ended, the tax period is understood to have been concluded in the following cases:
- When the entity is extinct. The termination is understood to occur when the company’s cancellation seat takes place in the Commercial Register, and is therefore required to submit its declaration within 25 calendar days of six months of that cancellation seat.
- When a change of residence takes place of the entity resident in Spanish territory abroad.
- When the transformation of the legal form of the entity occurs and this determines the non-taxation of the resulting entity.
- Where the transformation of the legal form of the entity occurs and this determines the change in its tax rate or the application of a special tax regime.
In no case, the tax period may exceed twelve months.
Key developments for the 2019 declaration
In relation to corporation tax, there have been no major regulatory changes for the tax periods initiated in 2019, regardless of the management developments in the tax. However, some regulatory amendments below, which had effect after the start of the 2018 tax period, may constitute for certain taxpayers, depending on the date of commencement of their tax period, a novelty in their tax return, all without prejudice to the filing deadlines and peculiarities of the declarations established by the Autonomous Communities of the Basque Country and Navarra.
Among other innovations, we can highlight:
> Adding a new non-deductible spending assumption
With effect for tax periods commenceing as of November 10, 2018, the non-deduction of expenditure arising from the tax debt of the Tax on Property Transfers and Documented Legal Acts, modality Documented Legal Acts (ITP and AJD), notary documents, is established, where the taxable person is the lender (in the case of mortgage-guaranteed loan deeds).
> Changes to the Canary Islands Tax Regime
- With effect for tax periods starting on or after November 7, 2018, the joint limit on the share for deduction for investments in the Canary Islands in the islands of La Palma is raised, La Gomera y El Hierro so that the minimum cap of 80% will be increased to 100% and the minimum spread of 35 points goes to 45 percentage points where Community state aid legislation permits and these are investments provided for in Law 2/2016 of 27 September and other laws on measures for the management of the economic activity of these islands.
- With effect for tax periods starting on november 7, 2018, regarding deductions for investments in film productions, audiovisual series and live performances of performing and musical arts performed in the Canary Islands, the following NEW is incorporated:
- 1. The amount of the investment deduction in Spanish productions of film feature films and audiovisual series of fiction, animation or documentary from 4.5 to 5.4 million euros in the case of productions made in the Canary Islands is increased. The amount of the deduction for expenses made in the Canary Islands for foreign productions of film feature films or audiovisual works is also increased from EUR 4.5 to EUR 5.4 million.
- 2. With regard to the minimum amount of expenditure in the event of the execution of post-production or animation services of a foreign production, it is fixed for expenditures incurred in the Canary Islands at EUR 200,000.
- 3. The minimum amount of the deduction for expenses incurred in the production and exhibition of live performances of performing and musical arts is fixed at 900,000 euros in the case of expenses made in the Canary Islands.
- With effect for tax periods starting on or after November 7, 2018, entities that hire a worker to carry out their activity in the Canary Islands will be entitled to the enjoyment of the tax benefits that are established by the tax regulations, in accordance with the requirements established there, but increasing them by 30%.
- With effect for tax periods starting on or after November 7, 2018, in the case of Shipping Companies to which the bonus established in Law 19/1994, amending the Economic and Tax Regime of the Canary Islands, will be taken as a positive result the corresponding exclusively to non-reward income. And in the case of shipping companies taxed under the Special Regime on the basis of tonnage, split payments shall be calculated on the amount of the taxable amount obtained in accordance with Article 114.1 of the Law on Corporation Tax.
> Royal Decree-Law 26/2018 approving emergency measures on artistic creation and cinematography
With effect from 5 July 2018, producers registered in the Register of Film Companies of the Ministry of Culture and Sport who are responsible for the execution of a foreign production of film feature films or audiovisual works that allow the making of a physical medium prior to their serial industrial production, shall be entitled to a deduction of 20% of the expenses incurred in Spanish territory , provided that the costs incurred there are at least 1,000,000 euros.
The basis of the deduction shall consist of the following expenditure incurred in Spanish territory directly related to production:
- The costs of creative staff, provided that you have tax residence in Spain or in some Member State of the European Economic Area, with the limit of EUR 100,000 per person.
- Expenses arising from the use of technical industries and other suppliers.
The amount of the deduction may not exceed 3,000,000 euros for each production made. The amount of this deduction, together with the other aid received by the taxpayer, may not exceed 50% of the cost of production.
> Royal Decree-Law 27/2018, of December 28, which adopts certain measures in tax and cadastral matters
- The assets shall be valued in accordance with the criteria laid down in the Code of Commerce, corrected by the application of the provisions laid down in this Law.
- However, changes in value arising from the fair value criterion shall have no tax effect until they are to be attributed to the profit and loss account, without prejudice to Article 15(l) of this Act, or until they must be charged to a reserve account if so established by a legal or regulatory rule. The amount of accounting revaluations shall not be integrated into the taxable amount, except where they are carried out under legal or regulatory rules requiring the deposit to be included in the profit and loss account. The amount of the revaluation not integrated into the taxable amount shall not determine a higher value, for tax purposes, of the revalued elements.
- Charges and credit to reserve accounts, which are considered expenses or income, respectively, as soon as they have tax effects in accordance with the provisions of this Law, as a result of the first application of Circular 4/2017, of 27 November, the Bank of Spain, credit institutions, public and reserved financial reporting rules and financial statement models, shall be integrated equally into the tax base corresponding to each of the first three tax periods commenceing from 1 January 2018, without such integration being applicable to Article 130 of this Law.
- In the event of the termination of the taxpayer within that period, the outstanding amount shall be integrated into the taxable amount of the last tax period, unless it is the result of a restructuring operation to which the tax regime laid down in Chapter VII of Title VII of this Law applies.
- The report of the annual accounts for the financial years for those tax periods shall mention the amounts integrated into the taxable amount and the amounts to be integrated.
Top news in is and IRNR declaration models for the 2019 financial year
In the BOE of 26 June 2020, and in force as of July 1, haC/565/2020 of June 12, which approves the models for corporate tax and non-resident income tax, has been published for permanent establishments and entities under the allocation of income incorporated abroad with presence in Spanish territory, for tax periods initiated between 1 January and 31 December 2019, issues instructions on the declaration and entry procedure and lays down the general conditions and procedure for electronic filing.
We can anticipate that there have been no major regulatory changes for taxpayers with tax periods initiated in 2019 that affect the models approved by this standard that we are reviewing. As the only amendment affecting the declarations is known and which is a consequence of the COVID-19 pandemic we are experiencing, it is the measure introduced by Royal Decree-Law 8/2020, of 17 March and by Royal Decree-Law 19/2020 of 26 May, in relation to the extraordinary measures that extend the approval periods of the annual accounts, and which affects the filing of the corporate tax return for taxpayers in line with the aforementioned Royal Decree-Law 8/2020,where the filing of a new return is enabled until 30 November 2020.
Two new boxes are introduced in models 200 and 220: “‘Declaration corresponding to Article 124.1 LIS without approving annual accounts” and “New declaration Article 12.2 Royal Decree-Law 19/2020”. It is mandatory to check the first of the boxes when filing the return for taxpayers whose deadline for the formulation and approval of the annual accounts for the financial year has been in line with the provisions of royal decree-law 8/2020 (arts. 40 and 41). If there is a difference between the self-settlement that must result from the annual accounts approved with the previous one, a new declaration must be submitted until November 30, 2020, by checking the box, “New declaration article 12.2 Royal Decree-Law 19/2020”.
In addition, the box corresponding to supplementary declaration should be checked in the event that this new declaration is considered complementary, incorporating on page 14a of the Model 200 and page 9 of the Model 220 the boxes necessary to manage this new declaration in the same way as in the case of supplementary declarations.
Below are some other new features introduced in the 200 model:
- Tax data will be provided for tax periods commenceing between 1 January and 31 December 2019- for which information will be provided.
- Modification of the detail box of corrections to the profit and loss account result (excluding corporate tax correction) on page 19 of the model which will be voluntary for all adjustments on pages 12 and 13 of that model, thus incorporating a breakdown derived from the taxpayer’s accounting and tax information. The reason for volunteering is a consequence of the COVID-19 pandemic. For the following tax periods, their breakdown is expected to be mandatory. This modification is intended to facilitate the completion of corrections to the result of the profit and loss account (excluding the corporate tax correction) in future years by knowing whether the tax corrections made are permanent, temporary from the previous financial year or years, as well as the outstanding balance for the purpose of each of the adjustments. This information, once completed, will be grouped in the summary table contained in pages 26a to 26 sexies of the model 200, which will also be voluntary to complete, for tax periods initiated from January 1, 2019.
- New characters have been introduced on page 1 with the aim of improving taxpayer identification and declaration characterization. In particular, the following has been incorporated:
- A character “ZEC entity in fiscal consolidation”.
- A character “Diocese, religious province or ecclesiastical entity that integrates entities less than their dependents”.
- A “Unions, Federations and Confederations of Cooperatives” character. In addition, the characters “Multinational Group Subsidiary” and “Last Multinational Group Parent Company” have been added.
In addition, for tax periods started on or after January 1, 2019, on models 200 and 220 data have been included, which were not collected visually in the models annexed to the order, although requested in the aid form and in the registration designs for direct presentation: net amount of the turnover of the twelve months prior to the start date of the tax period or the deduction for research, development and technological innovation in the Canary Islands.
As in previous years, the forms provided for providing information in relation to certain corrections and deductions to the profit and loss account of EUR 50,000 or more are published without variation (Annex III) and the annual report of activities and projects carried out and researchers affected by Social Security bonuses (Annex IV).
Tips to keep in mind
> Tax adjustments
Accounting criteria and possible differences (permanent or temporary) with the tax criteria of the tax regulations should be analysed and reviewed. Among other adjustments, it is advisable to check: Accounting expenses arising from fines, penalties, donations or donations; by corporation tax, administrator whose paid position does not appear in statutes, liberalities and attention to customers and suppliers exceeding 1% of the net amount of the turnover; etc. accounting impairments with the exception of stocks and insolvencies of debtors, the latter, if certain requirements are met, will be deductible; expenses arising from the excess paid on the occasion of the termination of an employment or commercial relationship (exceeding EUR 1,000,000 or the exempted amount if it exceeds that figure); provision for sales returns, excess depreciation or provisions; Temporary allocation of expenses and income before or after their accrual if not allowed by the tax rule, non-deductible financial expenses in trading groups and excess financial expenses on the 30% limit of operating profit if they exceed 1,000,000 euros; freedom of depreciation, excess depreciation posted in previous years that were not deductible in those; impairment losses; transactions that have to be valued at market value fiscally and not by accounting; transactions with deferred payment in the year in which the transfer occurs, dividends and exempt capital gains derived from shares in resident and non-resident entities, etc.
> Temporary allocation of expenses and income
If you have earned income or accounting profits from any sale, provision of a service or the collection of compensation, you may defer the accounting income and allocate it as the charges are enforceable, unless you opt for the accrual criterion.
It is considered that we are facing a forward transaction when it has been agreed that the consideration is received by successive payments or in a single payment and that, between the delivery and the expiration of the last or only term, more than one year has elapsed
Review the depreciation methods and percentages used in accounting to see if they are admitted by the tax rule or whether there is a possibility to make the most of this expense to lower the tax base. In the table method, you can switch from year to year between the maximum and minimum coefficients.
New elements of the fixed material whose unit value does not exceed EUR 300 may be freely amortized by all entities, with a limit of EUR 25,000 per tax period. If you have any used equity elements on your balance sheet, you can depreciate it by applying the maximum percentage of tables that correspond to you multiplied by 2.
Intangible assets with defined useful life shall be amortized fiscally on the basis of their useful life.
> Trade fund
It recalls that the accounting rule requires amortization in 10 years (10%), and the Tax Law provides for a maximum deductible expenditure for this concept of 5% per annum (if the company is of a small size it will be eligible for accelerated depreciation and may multiply by 2 the maximum tax depreciation, with the intangibles being the applicable coefficient 1.5). Therefore, a positive extra-final adjustment will have to be made.
> Impairment losses
Accounting impairments are no longer deductible, except for stocks and insolvencies of debtors. However, attention should be paid to the reversal impairments that were once tax deductible (material assets, real estate or intangible investments and fixed income securities that are quoted). In these cases, the nature of the asset it reverses must be taken into account in order to determine the time of allocation in the taxable amount of the tax.
> Impairment losses on shares
Deduction is denied in the case of shares in resident entities if, during the period in which the impairment is recorded, they meet the conditions for applying the exemption from dividends and capital gains arising from their transfer, and also prevent the deduction of losses resulting in the transfer of shares in non-resident entities which, not reaching a significant percentage of participation in , the participating entity is not subject to a tax similar to ours with a minimum nominal of 10%.
> Transitional regime for impairment losses on shares endowed before 01 January 2013
Compulsory reversal of impairment losses of shares that were deductible in tax periods initiated before 01-01-13 is established. Regardless of whether or not the reversal of the value of the share share is made, the taxable person shall integrate that loss into the taxable amount at least equally in each of the five tax periods commenceing from 01-01-2016. Thus, in tax periods starting from 01-01-2021, the loss endowed in its entirety will have been integrated, even though the value of the share of the share has not been reversed. In the event of the transfer of the securities, the impairment pending reversal shall be attributed to the period in which the transfer occurs, with the limit of the positive income obtained.
> Limiting losses on share transfer
The deduction of losses in the transfer of shares of resident and non-resident entities in cases of significant participation (participation of at least 5% or an acquisition value of more than EUR 20 million) is prevented, although it is understood to have been fulfilled if it was reached on any day of the year prior to transmission. In addition, the deduction of losses resulting in the transfer of shares in non-resident entities is prevented where, not reaching a significant percentage of participation, the participating entity is not subject to a tax similar to ours with a minimum rating of 10%. Partial application of the above is supported if the requirements are also partially met.
> Deduction of losses from share transfer
Losses arising from the transfer of resident shares will continue to be integrated, but only when on any day of the previous year a percentage of 5% or an acquisition value of EUR 20 million has not been reached in the share of the share, and if the loss is by transmission of shares in non-residents, only if such a percentage is not reached , but if the minimum taxation requirement is met in the country where the shareer is located.
> Non-deductible expenses
The various items of accounting expenses that are not tax deductible – fines, criminal or administrative penalties, liberalities or donations – must be identified. In your case, a positive adjustment to the accounting result will have to be made for the amount of the posted expense. Remember that expenses for customer and supplier care remain deductible, but with the annual limit of 1% of the net amount of the turnover, and that it is not considered a liberality to pay administrators for the performance of senior management functions, nor for performing other functions derived from a contract of employment.
Keep in mind that expenses arising from the termination of the common employment relationship are not deductible, or a commercial relationship such as that of the administrators or members of the Board of Directors who exceed, for each perceptor, 1,000,000 euros, or if it is higher, the amount that is exempt from severance or dismissal compensation of the worker established in the IRPF regulations (remember that this exemption is limited to the amount of 180,000 euros).
> Financial expenses
Keep in mind that the deduction of financial expenses is limited to 30% of the operating profit of the year (with the possibility, following certain rules, of deducting excesses in the following years) but allowing to deduct in any case the expenses of the financial year up to 1,000,000 euros (if the tax period of the entity has a duration less than the year, it must be apportioned according to the duration of the tax period for the year). This limit does not apply in the tax period in which the entity is extinguished, except in certain cases of corporate restructuring or operations within the tax group.
> Linked operations
Certain transactions such as those carried out between partners with 25% or more of participation and companies, between the company and the administrators (but not with respect to the remuneration received for the performance of their duties), between the company and the relatives (up to third degree) or spouses of the partners and administrators and the company must be assessed at market value , two entities in the same accounting group, etc. These transactions also entail the obligation to be documented, although the requirements in this regard are different depending on the billing of the entity or group, the nature of the transactions and the amount thereof. Also keep in mind the safety standard for certain related transactions between professional partners and their professional companies.
> Capitalization reserve
Take advantage of this figure to encourage reinvestment. If your company is taxed at the general rate (you also stop partially exempted and newly created entities) you may reduce your tax base by 10% of the amount of the increase in your own funds to the extent that this increase is maintained for a period of 5 years and a reserve is made for the amount of the reduction, duly separate and unavailable during these 5 years.
> Compensation of negative tax bases from previous years
It recalls that although the time limit, which was 18 years, has been removed to compensate for negative tax bases, the amount to be compensated by 1,000,000 euros is still limited. Up to that amount can always be compensated without restriction, but from it can only be offset up to 70% of the taxable amount prior to the application of the capitalization reserve. In addition, there are limitations on the compensation of negative tax bases, depending on the net amount of the turnover (INCN) of the 12 months prior to the start date of the tax period, which will operate as follows: (a) Compensation shall be limited to 50% of the previous tax base if the INCN is at least EUR 20 million and less than EUR 60 million; b) Compensation shall be limited to 25% of the previous tax base where the NSN is at least EUR 60 million.
> Small Companies (ERD)
Remember that they will be those whose turnover is less than 10,000,000 euros in the immediately previous tax period, with the advantage that they can apply the tax incentives of the standard. The special ERD scheme continues to apply even if that amount is exceeded by 10 million turnover in the 3 immediate and post-year years in which the limit was exceeded, provided that it has met the conditions for implementing the ERD regime in the period in which it exceeded and in the previous 2 years.
Take advantage of the leveling reserve consisting of a reduction in the tax base of up to 10% of its amount with an absolute maximum of one million euros in the year. If the taxpayer has a negative basis in the following five years, it is reduced by the amount of the reduction applied by this reserve and, otherwise, the minor amounts are added to the positive basis of the fifth year, acting in this case as a simple decrease.
> Take advantage of quota deductions and their limits
Deductions are a good tax optimization tool that companies must make appropriate use of, respecting the legal limits applicable in the 2019 financial year. The time limit for applying deductions is 15 years from the period in which they were generated and could not be deducted, being 18 years for R&D&I balances.
The limit for each financial year of total deductions is 25% of the full quota less, where appropriate, deductions to avoid international double taxation and bonuses. The above limit is 50% if R&D&I expenses exceed more than 10% of the full quota.