Gutiérrez Pujadas & Partners

Corporate Tax and Annual Accounts: Key points for complying with your tax obligations in Spain

Every year, thousands of companies and commercial entities in Spain must face two of the most important tax obligations of their activity: the payment of corporation tax and the filing of annual accounts. Both procedures are not only essential to comply with tax and commercial regulations, but also reflect the financial situation of the entity before the Administration, customers, suppliers and potential investors.

In this article, we explain in simple terms what corporate tax is, what the filing of annual accounts involves, what the deadlines are and what the consequences of failing to comply with these obligations may be. If you are a director or partner of a company, it is essential that you are aware of all these aspects and have specialist advice to avoid penalties and optimise your tax situation.

What is corporation tax?

Corporation tax is a direct tax levied on the income of legal persons and other entities resident in Spanish territory. It is regulated by Law 27/2014, of 27 November, on Corporation Tax, and is applied to the profits obtained by the company during each financial year.

This tax is payable on the last day of the tax period (usually 31 December), and the tax base is determined on the basis of the accounting result, adjusted in accordance with tax rules (e.g. depreciation, provisions or non-deductible expenses).

The general tax rate is 25%, although there are reduced rates applicable to newly created entities, cooperatives or non-profit entities.

Which companies are required to file it?

All entities with their own legal personality are required to file a corporate income tax return:

  • Limited liability companies (SL)
  • Public limited companies (SA)
  • Labour companies
  • Cooperative companies
  • Economic interest groups
  • Investment funds and other entities specified by law

Even if the company has not had any activity or income during the financial year, it is still required to file a return.

Deadlines for filing corporate income tax

The return is filed using Form 200 of the Tax Agency, and the standard deadline is:

25 calendar days following the six months after the end of the financial year.

For financial years ending on 31 December, the usual deadline is from 1 to 25 July of the following year.

In addition, a partial payment on account of the tax must be submitted using Form 202, which can be done in April, October and December, depending on the volume of transactions.

What are annual accounts?

Annual accounts are a set of accounting documents that accurately reflect the financial position and results of the company at the end of the financial year.

Their preparation and presentation is mandatory for all commercial companies, in accordance with the provisions of the Commercial Code and the Capital Companies Act.

The annual accounts include:

  • Balance sheet: shows assets, liabilities and net equity.
  • Profit and loss account: details income and expenses.
  • Statement of changes in net equity.
  • Cash flow statement (mandatory for large companies).
  • Report: explains and expands on the information in the other documents.

These documents must be prepared by the directors within a maximum period of three months from the end of the financial year (until 31 March if the financial year ends on 31 December).

The accounts must then be approved by the General Meeting and filed with the Commercial Registry within one month of their approval (normally by 30 July).

Penalties for not filing annual accounts or corporation tax

Failure to comply with these tax and accounting obligations may result in serious financial and legal consequences:

  • Failure to file annual accounts: Penalty of between £1,200 and £60,000, depending on the size of the company. In addition, the Commercial Registry may close the company’s registration file, preventing the registration of corporate acts.
  • Failure to file corporation tax: Penalties ranging from £150 to 150% of the amount not paid, plus surcharges and interest for late payment.

In addition, failure to file annual accounts affects transparency and can damage the company’s image with banks and suppliers.

It is therefore essential to have a professional tax and accounting advisory service that guarantees strict compliance with all these obligations.

What are the benefits of complying with these obligations correctly?

Although it may be perceived as an administrative burden, orderly compliance with corporation tax and annual accounts brings numerous advantages:

Transparency and trust: facilitates access to bank financing, external investment and relationships with customers and suppliers.

Prevention of penalties: reduces the risk of inspections, surcharges and fines.

Tax optimisation: proper planning allows for the application of deductions and allowances that can reduce the tax burden.

Legal certainty: protects directors and partners from potential personal liability.

The importance of specialist advice

At Gutiérrez Pujadas & Partners, we understand that your company’s tax and accounting matters are essential to its smooth running. That is why we offer a comprehensive tax and accounting advisory service, which includes:

  • Preparation and filing of corporate income tax returns.
  • Drafting and filing of annual accounts.
  • Accounting in accordance with current regulations.
  • Tax planning and profit optimisation.
  • Personalised and friendly service throughout the year.

Our team of experts will help your company comply with all its legal obligations in a secure, efficient and hassle-free manner.

Corporate tax and annual accounts are two key elements that every company must manage rigorously. Not only to avoid penalties, but also to project an image of professionalism and solvency.

If you want to operate with peace of mind and ensure that your business complies with current regulations, Gutiérrez Pujadas & Partners is at your disposal to accompany you every step of the way.

Do you need help with your accounting or taxes?

Contact us and discover how we can help you optimise your company’s tax situation.