How an SL is taxed: what the tax authorities don’t tell you
Knowing how an SL is taxed is essential if you have a business or if you intend to create it.
In this article we tell you what you need to know to pay the fair and necessary.
How to tax a SL (Sociedad Limitada) in Spain: everything you need to know
Apart from the withholdings on personal income tax on payroll, payments and dividends, or Social Security contributions, there are a series of taxes that every commercial company has to face.
However, when it comes to knowing how a SL is taxed, we point out that there are certain nuances depending on the size, turnover and the number of employees.
Here we give you more details, taking into account the fiscal calendar:
1. Corporate Tax (IS)
The IS is the main tax that companies have to pay on their profits.
A percentage is applied, but beware, this varies depending on several circumstances.
This tax has to be declared and settled during the first 25 days of July.
Companies with a turnover of more than 6,010,121.04 euros and those with profits will make the fractional settlement of the tax in April, October and December.
As a general tax rate, we have 25%, but…
- Small companies only pay 20% of the profits. For this, it is necessary to have a business margin of less than 10 million euros. Companies that have exceeded 10 million euros, but that in the previous 3 years were small companies, will pay less taxes.
- Newly created companies offer a much lower tax rate. 15% during the first two years.
- The case of micro-enterprises (less than one million euros in turnover) is different. For example, 17% for the first 50,000 euros of business and, for the remaining higher figures, 20%. There are, however, gradual transitional periods, just like in small companies.
Finally, it should be noted that there is the possibility of compensating the losses of previous years in the previous 4 years.
If you have lost money, you can lower that loss so that the taxable base to be paid from the IS is lower.
2. Value Added Tax (VAT)
VAT is the main indirect tax paid in Spain and that directly records the value of the goods and services that are sold and purchased, both at home and abroad.
However, there are three types: the general (21%), the reduced (10%) and the super-reduced (4%, with exceptions to 5 or 0%).
So that you do not have problems, we recommend that you consult the numerous exceptions established by the Value Added Tax Law.
VAT settlements have to be made quarterly.
Specifically, the 20th of the month following the settlement period, except in January, which is the 30th.
In the event that an excess of paid VAT has been paid in a quarter, it can be offset in the following.
3. How a SL is taxed: Municipal taxes and fees
There are other types of taxes and fees that are municipal, even if they are established by the State.
The tax rates will vary depending on the municipality, which can subsidise it or even make it exempt:
- IAE (Tax on Economic Activities): although you have to present the census declaration of the IAE, managed by the municipalities, the truth is that only companies with a certain level of business pay it. Those that do not have a turnover of more than 1 million euros and, in any case, commercial companies during their first year are exempt.
- Waste rates and certain businesses: waste rates and certain businesses may depend on the city council or the Autonomous Communities. In this case, it is best to inform yourself because, depending on the activity of your company, “ad hoc” taxes can be applied by the nature of it.
- IBI (Real Estate Tax): the IBI will apply to those companies that have premises or buildings owned by them. It is paid every year and will depend on the type of tax decided by each municipality.
In all cases, the settlement period is annual. What happens is that some city councils or Autonomous Communities allow splitting the payment.
In short...
The knowledge of how an SL is taxed is essential to avoid surprises, pay what corresponds and not have fines.
As Spanish tax legislation is complex and there are several administrations, we recommend relying on a tax advisor for companies.
At Asesoría Orihuela Costa we can help you. Call us to know more!
