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| Company Tax |
| 3. When are taxes payable? |
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| The tax year in Spain is the same as the calendar year. |
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| Businesses with a turnover of less than €6 million, are classed as SMEs (small and medium sized enterprises) and pay taxes quarterly. |
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| Large businesses (> €6 million) pay taxes monthly. |
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| Payment always needs to be made within 20 days of the end of the quarter or month. |
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| Rates of tax (for SMEs): |
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| 4. Legal obligations |
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All companies must submit annual accounts to their shareholders for approval. These must be approved within six months of the end of the accounting period. |
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| All companies need to submit annual accounts to the Companies Registry (Registro Mercantil). |
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We take it upon ourselves to take the books of account to the Companies Registry, have them stamped and return them duly legalised to the firm. |
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| 5. Company Tax |
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| Company Tax is a tax levied on the profits of legal entities. The general rate in Spain is 35%. |
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| It's one of the highest rates of tax in Europe; for that reason, in the 2007 tax reform (which took effect on 01-01-2007), it's been reduced to 25% for SMEs (up to a profit level of €120,202.41). |
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| For the other firms - the ones which aren't SMEs - the general rate is going to be reduced a little each year: the rate for 2007 is 32.5%, and for 2008 it's 30%. |
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Deductions from the amount payable
With the new law, starting on 01 January 2007, there will be a reduction of 20% per year, up until 2011, in the following deductions: |
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- Advancement of information and communications technologies.
- Environmental measures.
- Vocational training.
- Company contributions to social welfare mechanisms.
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| With regard to the deductions for R+D+i (research, development and investment) the percentages are also being reduced in the next two years. |
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| 6. Payment of Company Tax |
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The company tax return must be filed within 6 months and 25 days of the end of the accounting period. |
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For example, for the 2007 tax period, we'd pay the company tax due by 25th July 2008. In the case of payment of company tax by instalments, these are paid in April, October and December. |
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As a general rule, each instalment is 18% of the previous year's company tax liability. |
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