We tell you about the tax obligations of a limited liability company in Spain.

Firstly, a Limited Company (S.L.) has to draw up the deeds and register with the Tax Agency; to do this, it will use the 036 company form, which will identify the company and allow it to obtain the NIF (tax identification number) with which to operate. Once these formalities have been completed, the annual tax obligations for companies are as follows, there are many more but these are the main ones:

1. Economic Activities Tax (IAE)

Company registration with the IAE is compulsory, although for most self-employed workers and SMEs it is a formality. In order to pay this municipal tax, you must have a turnover of at least 1 million euros net from the third year of activity (the first two years are exempt). Of course, you have to use the corresponding tax form. So this detail must not be forgotten.

2. Corporate Income Tax (IS)

Corporate Income Tax is the tax par excellence for commercial companies, whether they are S.L. or Public Limited Companies. It is generally paid in July, although payments on account can be made every four months, if so indicated. The general rate is 25%, although it may vary depending on the territory, size or type of company. Obviously, it is only payable on gross profits, if they are made. For this procedure, form 200 or 202 is used, depending on whether the payment is one-off or on account.

It is extremely important to make sure which tax rate is applicable. The idea is to adapt this question to the circumstances of each case and avoid future problems.

3. Value added tax (VAT)

VAT is the tax that has to be settled most frequently, because it is paid quarterly. In this case, the settlement periods are the 20th day of the month following the end of the quarter, with the exception of January (30th day). The difference between input VAT and output VAT, if it is favourable, will have to be settled and, if it is negative, it will be compensated in subsequent quarters. In any case, the calculation of the invoices and the corresponding subtraction must be made.

Quarterly declarations are made using form 303 and annual declarations using form 390.

4. Personal income tax for employees

Finally, companies are responsible, if they have employees, for applying withholdings on their pay slips. In this case, depending on their income and circumstances, the amount to be withheld will vary. In any case, for quarterly personal income tax returns, form 111 will be used and, as an annual information form, form 190. In any case, it is advisable to get proper advice to avoid confusion and, furthermore, this information must be provided to the Administration, it is not an option.

5. Annual declaration of transactions with third parties

This is an informative form called 347 and it is used to declare the volume of transactions, including VAT, of transactions of more than €3,000 carried out with Spanish companies. In tax jargon, the 347 is “the Bible”.

6. Recapitulative declaration of intra-community transactions

If your company does business with a company or self-employed person in Europe, you have to declare the volume of transactions with each European company using form 349. In general it is a quarterly declaration.