MODIFICATION OF THE PAYMENT PERIOD OF THE BUSINESS TAX

 

The voluntary period of the Business Tax (I.A.E.) payment has been modified by a Resolution of the Spanish Tax Agency published yesterday (June 19^th of 2019) by the Spanish Official State Gazette. This modification affects both national and provincial rates for the financial year 2019.

The Business Tax applies to Corporations, Civil companies, entities without legal personality which constitute an economic unit (or a patrimony susceptible of taxation) and Non Residents with a permanent establishment in Spain engaged in an economic, professional or artistic activity within the Spanish territory (art. 35.4 of Law 58/2003, of December 17th, connected with art.82.1.c of Law of Local Treasuries, T.R.L.R.H.L.). Even though, taxpayers in the first 2 tax periods of the economic activity (82.1.b. of T.R.L.R.H.L.) or with a net turnover lower than 1.000.000€ are exempted.

Payment period

The payment in voluntary period for 2019 has been set from September 19^th to November 20^th of 2019, both dates being inclusive.

Form of payment

The Spanish Tax Agency shall send to the taxpayers the payment document, which has to be presented in any of the credit entities considered as “Collaborating” (entidades colaboradoras) for its payment.

In case the payment document of the Business Tax was not received, the taxpayer has to pick a duplicate up in the appropriate Tax Office for its fiscal domicile (Delegación de la A.E.A.T./ Administración de la A.E.A.T.)

 

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PENALTIES FOR CASH PAYMENTS IN AMOUNTS GREATER THAN THE ONES ALLOWED BY LAW

 

 

Since the entry into force of Law 7/2012, of 29^th October, entrepreneurs and professionals acting as such are not allowed to pay in cash transactions with an amount equal or greater than 2,500€ (or its equivalent value in foreign currency).

If the payer is a natural person who is a resident abroad and is NOT acting as an entrepreneur or as a professional, the limit shall be 15,000€.

Cash is understood as paper money, coin, bank checks and any physical or electronic means designed to be used as payment to bearer (article 34.2 of Law 10/2010, of 28^th April).

Entities intervening in the payments are obliged to keep the documentation that certifies that such operations have not been paid cash for, at least, 5 years.

In case of break of these rules, the penalty will consist of 25% of the total amount delivered in cash and will be imposed to both the PAYER and the RECEIVER.

 

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DEDUCTION FOR INVESTMENT IN RECENTLY INCORPORATED COMPANIES

As of January 1st 2018 the maximum annual deduction base is increased from 50.000 to 60.000€ and the percentage of tax deduction from 20% to 30%. (article 68.1 and additional provision No. 38ª.2 of Spanish Income Tax Law)

 

The deduction for investment in recent incorporated companies was first regulated by the Law No. 14/2013, of September 27^th, in order to favour the investment of capital in the creation of companies.

This deduction is exclusively applied to the part of the total tax liability which corresponds to the Spanish central state.

The maximum annual deduction base (formed by the value of the shares subscripted) is 60.000€.

In case that the taxpayer had sold company shares and obtained an exemption from taxation by means of reinvestment of the obtained amount (article 38.2 of the Spanish Income Tax Law), the deductible base will only consist on the part EXCEEDING THE REINVESTMENT.

The amount of the shares acquired with the balance of a company saving account will not form part of the deduction base (transitory provision 28ª of the Spanish Income Tax Law). Note that company saving accounts were suppressed on January 1^st 2015.

The deduction percentage is 30%.

Requirements for the application of the deduction

·         Requirements applicable to the entity (article 68.1.2 of the Spanish Income Tax Law)

o   Having the legal form of Corporate Company, a Limited Company, a Laboral Corporate Company or a Laboral Limited Company (Corporate Tax Law, Royal Decree Law No. 1/2010, of 2^nd July, and Laboral Corporate Law No. 4/1997, of 24^th March)

o   Undertaking an economic activity. This excludes fixed and movable assets referred in article 4.8.dos.a) of Law No. 19/1991, of 6^th June about Property Tax.

o   Turnover not exceeding 400.000 €.

 

·         Requirements of shares (article 68.1.3 of the Spanish Income Tax Law)

o   Shares to be deducted must have been acquired at the time of the incorporation of the company or at the time of a capital increased taking place in the 3 years following the constitution.

o   Shares must be held by the taxpayer, at least, for 3 years and at the most for 12.

o   Direct or indirect participation of the taxpayer, together with the one owned at the same company by the spouse of the taxpayer or any relative of the taxpayer in 2nd grade (in direct or collateral line) may not exceed 40% of the share capital.

o   The activity of the entity may not be the same previously exercised by the taxpayer.

 

·         Formal requirements (article 68.1.5 of Spanish Income Tax Law)

o   Certification with the identification of shareholders, percentage and period.

e.g.: Let’s suppose that in January 2018 a taxpayer invests 70.000€ in a recently incorporated company which fulfils all deduction requirements. The máximum amount to be deducted would be the following: ·         Deduction in the total tax liability which corresponds to the Central State o   Maximum base: 60.000€ o   Deductions amount: 60.000 x 30% = 18.000€ ·         Deduction in the total tax liability which corresponds to the Regional Government o   Deductible investment: 70.000 – 60.000 = 10.000€ o   Amount of the deduction: 10.000 x 20% = 2.000€

 

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WHO IS OBLIGED TO FILE INCOME TAX DECLARATION IN 2018?

Taxpayers are obliged to file annual Income Tax declaration 2018 to the Spanish Tax Agency when they have received ANY of the following incomes in the amount indicated:

1.       WORK OUTPUTS exceeding the annual amount of 22.000 gross

a.       When they come from an only payer

b.       When they consist of passive benefits (article 17.2.a of Income Tax Law), even if they come from two or more payers, provided that:

                                                               i.      the Tax Agency has determined the amount of the pertinent withholdings (by prior presentation of a form No. 146 by the taxpayer),

                                                             ii.      the actual number of payers does not enhance the number initially declared in the form No. 146,

                                                           iii.      the amount of the passive benefits actually received by the taxpayer does not exceed the amount initially declared in more than 300 € and

                                                           iv.      none of the circumstances determining the increase in the type of withholding has occurred within the year.

2.       WORK OUTPUTS exceeding the annual amount of 12.643 €:

a.       when they come from more than a payer and the amount obtained from the second and subsequent payers exceeds 1.500 € (except when the taxpayer had died before July 5^th 2018),

b.       when the related work outputs are not subject to withholding,

c.       when they consist of compensatory maintenance for the spouse economically affected by the divorce,

d.       when they are subject to a fixed retention.

3.       WORK OUTPUTS exceeding the annual amount of 12.000€, when they come from more than one payer, the amount obtained from the second and above exceeds 1.500€ and the taxpayer had died before July 5^th 2018.

4.       RETURNS ON PROPERTY INVESTMENT exceeding 1.000€

5.       YIELDS FROM CAPITAL exceeding 1.000€

6.       YIELDS FROM CAPITAL not subject to withholding

7.       ATTRIBUTED INCOME FROM URBAN BUILDINGS exceeding 1.000€

8.       HOUSING ALLOWANCE for the acquisition of social housing or housing with controlled price.

9.       INCOME FROM BUSINESS ACTIVITIES exceeding 1.000€

10.   CAPITAL GAINS exceeding 1.000€

11.   CAPITAL LOSSES exceeding 500€

12.   Taxpayers with the right to deduct their investment in HABITUAL RESIDENCE, DOUBLE INTERNATIONAL TAXATION, PENSION PLANS, etc.

13.   Taxpayers who want to request a REFUND derived from IRPF regulations.

(Article 96, 34^th and 18^th transitional provisions of Income Tax Law; article 61 of Income Tax Regulation)

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INFORMATIVE DECLARATION OF TOURIST RENTAL ACCOMMODATION

 

The Ministerial Decree HFP/544/2018, of May 24^th (BOE A-2018-7152) has regulated the obligation to inform about house renting for tourism purposes (seasonal rental), introducing a specific form, No. 179.

Any lessor of a house for tourism purposes (or person acting as an intermediary, according to art. 54.2 and 3 of Royal Decree 1065/2007, of July 27^th) must deliver the related quarterly informative statement, number 179, to the Spanish Tax Agency, providing the following details:

·         Identification of the owner (of the home or right) and of the assignees

·         Identification of the property

·         Number of days during which the property has been leased for tourism purposes

·         Amount received by the owner

·         Number of contract

·         Start date of the contract

·         Intermediation date

·         Means of payment used

This declaration has to be delivered within the calendar month immediately following the end of the quarter in which the house has been leased for tourism purposes.

 

NOTE THAT THERE IS NO REDUCTION IN THE TAX BASE

This kind of rental will not benefit from the reduction of 60% in the tax base, typical of house renting, provided in article 23.2 of Spanish Income Tax Law, because the contract is not intended to satisfy a permanent need for housing, but only a temporary one.

 

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TAX DECLARATION & MATERNITY ALLOWANCES

 

An innovation in the Spanish Income Tax declaration 2018 is the TOTAL EXEMPTION of maternity and paternity allowances.

This innovation is due to the Spanish Supreme Court judgement No. 1462/2018, of October 3rd 2018, which leads to a new regulation of the subject (1st article of Royal Decree-Law No. 27/2018, of December 28th). Maternity and paternity allowances are now totally exempt if they have been received from:

·         the Spanish public Social Security system or

·         friendly societies, as far as these societies are acting as an ALTERNATIVE to Social Security and the allowance received from them does not exceed the upper limit recognized by the Spanish Social Security for these concepts.

Allowances received within 2018 are automatically recognized, which means that taxpayers have only to deliver their Income Tax declaration according to the tax details provided by the Spanish Inland Revenue (=datos fiscales).

Notwithstanding, if the maternity or paternity allowances had been received in 2014 to 2017, these would have consequently been included in previous Income Tax declarations.  

In this case, taxpayers have the right to request for the rectification of the Income Tax declaration in which they had included the related maternity allowances.

 

HOW TO REQUEST FOR THE RECTIFICATION OF MATERNITY ALLOWANCES DECLARED IN 2014 - 2017

The Spanish Tax Office has already enabled a specific form to request for the rectification (see www.agenciatributaria.es). The form can be delivered via web site of the Spanish Tax Office, using an electronic certificate, a PIN code or the RENO system and it is not necessary to attach the accreditation certificate of the maternity/ paternity allowances.

 

 

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