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Management of Direct Taxes

Corporate Tax (CIT). Terms of payment for 2020.

According to the Royal Decree Law 19/2020 of tax and commercial measures, the deadline for filing the statement form continues to be the same as always, although the Annual Accounts have not been approved previously, by virtue of the special measures established by Royal Decree Law 8/2020, by which the deadlines were suspended to formulate and approve annual accounts. Therefore, it is confirmed that the 2019 Corporate Tax filing period will be the usual from July 1st to July 25th, more precisely until Monday, July 27, as July 25th this year is a Saturday.

If the Annual Accounts have not been approved, the accounting data so far will be used for the purposes of calculating and filing the Corporation Tax.

If the data included on the Annual Accounts approved after filing the Corporation Tax form were different, a second statement form shall be filed with the following deadline: November 30th, 2020.

In the event it was favorable to the Spanish Treasury, it will be considered a complementary statement. If it were with income, it will merit late interest from July 27th, 2020, but without late filing surcharges.

In the event it was favorable to the taxpayer, the usual procedure will not have to be followed to rectify the self-assessment, notwithstanding the powers of the Administration to verify the first and the new self-assessments.

Neither will the limitations on the rectifications of the tax options be applied (for example, the use of negative tax bases), nor will interest be charged on late payment.

The term of 6 months from which late interest is accrued, if the amount that is returned by the submission of the self-assessment has not been effective, will be counted from November 30th, 2020. Therefore, in the event that an amount to be returned from this second self-assessment, the accrual of default interest will begin on June 1st, 2021.

"BEPS" Action Plan. Transfer price

In accordance with the conclusions adopted by The “BEPS” Action Plan (which stands for “Base Erosion and Profit Shifting”), headed by the OECD (Organisation for Economic Co-operation and Development) and, more precisely, with reference to “Action 13: Guidance on Transfer Pricing Documentation and Country-by-Country Reporting” (regarding information and documentation of related-party transactions), as a novelty, the country-by-country information has been introduced as an instrument which will make it possible to evaluate risks of the transfer pricing policy of a group of entities.

As a result, Spanish Order HFP/1978/2016, of 28 December, has approved Form 231, regarding Country-By-Country Information. Consequently, any entity residing in Spain who takes part in a group with a turnover amount of over 750 million Euros and who is controlled by a non-resident parent-company shall be required (for tax periods beginning 01-01-2016) to file a communication addressed to the Spanish Tax Administration (AEAT) identifying the entity of the group which will submit the related-party transactions country-by-country information and the country or territory of residence of said entity.

In order to elaborate said communication to the Spanish Tax Administration (AEAT) regarding all entities residing in Spain who take part in a group we shall need the following information:

            Identification of the international group:

            * Business name of the international group.

            * Country of residence of the parent-company.

            * Tax Identification Number of the parent-company.

            * Tax Identification Number of the parent-company in its country of residence.

            * Business name of the parent-company.

Identification of the entity required to file the country-by-country information.

* Country of residence of said entity.
* Tax Identification Number.
* Tax Identification Number in its country of residence.
* Business name of the entity.

* Reason why the country-by-country information is submitted.  

Publication of new forms for Corporate Tax and Non-Resident Income Tax

Order HFP/227/2017 of 13 March has approved form 202 for making interim payments on account for Corporate Tax and Non-Resident Income Tax by permanent establishments and entities constituted abroad and operating in Spain that are subject to the income allocation system and form 222 for making interim payments on account for Corporate Tax using the consolidated tax scheme. The Order also establishes the general conditions and procedure for electronic filing. 

Withholding tax: Dividends

Currently, certain dividends paid by a Subsidiary company to its Parent company are exempted from withholding tax in Spain when the two companies are located in different Member States.

The exemption is subject to the following conditions:

1.    The Parent company must own at least 5% of the shares of the Subsidiary.

2.    Both companies must be one of the types listed in Annex I Part A of the Directive 2011/96/UE.

3.    Shares must have been held for a minimum of 12 months.

4.    Both companies must be subject to income tax in their own countries (according to the list of Annex I Part B of the indicated Directive).

These are the general conditions for the exemption but it would be necessary to know all the circumstances of the case to give our advice about this matter.

Lawyers and Tax / Labor Advisors

Law Firm located in Madrid and Barcelona (Spain).

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Piero Viganego Madrid Spain
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