Do you know the sanctions for not filing your annual accounts with the Commercial Register? Many companies often often forget about this crucial step, possibly due to inactivity, even though they are officially registered.
However, this submission is mandatory and must be made within 1 month period following its approval by the General Meeting of Shareholders. Its submission needs to be before the Companies House that corresponds to the Company’s registered office. In other words, if the meeting is held, for example, on June 30th, the last day of the deadline for filing with the registry is July 30th.
Failure to make this submission entails various sanctions. We will tell you what they are:
The failure of the Company to submit the Annual Accounts leads to various sanctions, which are the following:
Financial sanctions due to the absence of the Annual Accounts submission
According to Article 283 of the Capital Companies Law, failure to submit annual accounts can lead to significant fines, which ranges from 1,200 to 60,000 euros, imposed by the Spanish Accounting and Auditing Institute (Instituto de Contabilidad y Auditoría de Cuentas). Even for companies with a turnover of more than 6,000,000 euros, the annual fine can rise to 300,000 euros. It is, therefore, essential to comply with this requirement to avoid financial and legal consequences.
These sanctions are calculated as percentages of assets and turnover. Specifically, the imposition criterion is as follows:
- 0.5% of the assets, plus 0.5% of the total amount of sales included in the last tax return filed with the Spanish Tax Administration Agency (AEAT), will be applied.
- Failure to file the tax return (previous point) will set the penalty at 2% of the share capital recorded in the Commercial Register.
- If the tax return is submitted and 0.5% of the assets is greater than 2% of the share capital, the penalty will be quantified like the point above, reduced by 10%.
- It should be noted that these sanctions expire after three years (art. 283.4 of the Capital Companies Law).
However, sanctions may still be imposed for non-compliance in the annual accounts of subsequent years, regardless of whether or not the company is in business or whether the annual accounts are individual or consolidated, in which case the fine will be imposed on the parent company of the group.
Provisional closure of the company’s registration sheet
Article 378 of the Companies Register Regulation states that if one year has elapsed since the date of the financial year closure without the duly approved annual accounts having been submitted to the register, the Register of Companies shall not register any document submitted after that date. Until the deposit has been made, acts such as capital increases, change of company name, change of registered office, appointment of auditors, etc., cannot be registered.
However, as an exception to this rule, the Mercantile Registrar will register certain acts, even when the registry sheet is closed. These acts include:
- The removal or resignation of directors, managers, managing directors or liquidators.
- The revocation or resignation of general proxies.
- The dissolution of the company affected by the closure of the register and the appointment of liquidators.
- Those entries that have been ordered by administrative or judicial authorities.
Liability of the administrative body
Lastly, it should be mentioned that the board of directors is liable to the company itself, shareholders, and creditors for all damages and losses caused by the breach of duties inherent to his/her position in the Companyz. These include the preparation of the annual accounts, the Annual General Meeting announcement, and the submission of the annual accounts to the Mercantile Register.
Therefore, to avoid being penalized for not submitting the annual accounts to the Mercantile Register, which could put our company at risk, we must ensure that we deposit our annual accounts promptly to avoid fines and maintain a clean business record. At Leialta, we offer commercial and tax services that can help you with this process.
Contact us today for expert assistance!
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