Taxes are a constant source of concern, both for natural persons and legal entities, regardless of the type of company involved. Meeting formal duties can be a major challenge for those obliged to file their taxes.
For this reason, having the right advice is very important for the sound tax management of your company or venture. The experts will guide you and make you aware of all the taxes you are required to file. At BBMabogados we have the best lawyers in tax matters, so do not hesitate to contact us.
Direct and indirect taxes
The first thing worth noting is that taxes can be direct or indirect, depending on what is taxed. That is, a tax is direct when it applies to or taxes the money the taxpayer receives. Examples of these taxes include Personal Income Tax (IRPF), Corporation Tax and the Tax on Economic Activities.
On the other hand, a tax is indirect when it is established by reference to the taxable event, that is, to a particular activity; the most common is Value Added Tax (VAT).
What are the most common taxes that must be filed?
Having made the above distinction, let us look at the most common taxes that must be filed with the tax administration:
PERSONAL INCOME TAX (IRPF)
This tax is levied on the income of persons resident in Spanish territory during the last financial year. In the case of companies, it must be paid every three months, but if the company has a turnover greater than 6 million euros, it will be paid monthly.
The period for paying each quarter falls within the first 20 days of the following month. So the January–March quarter is paid between 1 and 20 April, the April–June quarter between 1 and 20 July, the July–September quarter between 1 and 20 October, and finally the October–December quarter between 1 and 20 January.
For income tax, two forms must be borne in mind. The first, form 111, contains the quarterly payment of the amount that the employer withholds from its workers each month. Meanwhile, form 190 is the summary of what has been withheld from each worker during the year. At the end of that year, form 190 is filed within the first 20 days of the following year.
In order to determine the taxpayer’s financial capacity, personal and family factors may be taken into account. This means there are exemptions, reductions and deductions that allow you to pay less tax.
CORPORATION TAX
This tax is levied on the earnings obtained by companies during the year. It is therefore only paid if profits are made. In this regard, it is important to know that there are different rates: the general rate of 25%; the reduced rate of 15% aimed at new businesses, which applies during the first two years of activity of new companies.
Payment is made in a single instalment, though it may be split in certain circumstances.
TAX ON ECONOMIC ACTIVITIES
This is a local tax, applicable to all types of economic activity, of both natural persons and legal entities. However, livestock farming, agricultural activities, fishing, non-profit entities, or businesses with a turnover of less than one million euros, are exempt from this payment.
VALUE ADDED TAX
This is an indirect tax and we all pay it every time we buy a product or service. Depending on how essential the good or service is considered, different rates apply.
Another feature is that it is paid to the company supplying the good or service, and it is that company that is responsible for making declarations every three months to the tax administration.
Advice on tax filing in Santander
Good advice will allow you to fully meet your tax obligations while ensuring tax savings, all in accordance with the legislation in force. In this way, you can take advantage of the applicable deductions, allowances or tax incentives.
Likewise, the preparation and filing of tax returns will be in the hands of professionals, minimising the risk of errors or omissions in them. Having the right advice is also a great advantage when calculating the deadlines for filing the various taxes, so that none slips through.
The basis for achieving a trouble-free return —and this applies regardless of the tax to be filed— is having all the necessary and relevant information for its preparation. To do this, careful attention must be paid to the scenarios set out in the relevant legislation, which will allow the best options to be chosen for the taxpayer.
Tax filing should not be seen as a mere automated formality. It is important for the taxpayer to understand its scope and how they can use the data reflected in their activity to improve it.
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