Setting up a business in Spain involves assuming a series of essential commitments such as the following:
- Tax returns, i.e. Value Added Tax (VAT-IVA), Personal Income Tax (IRPF) or Corporate Tax (IS).
- Drafting and presentation of accounting and tax books (issued invoices, incoming invoices, investment goods, intra-community transactions, stock book and annual accounts).
- All commitments resulting from compliance of labor regulations (prevention of occupational risks, social security contributions, reductions in respect of Personal Income Tax-IRPF, Workers’ Statute…).
- Enforcement of regulation regarding personal data protection (General Regulation of Personal Data Protection).
Companies’ tax returns must be filed by using a series of forms detailed in the following section.
Tax forms to be filed by a company
If you decide to set up a business in Spain, these are the tax forms you will have to submit to the Tax Agency:
- Model 036. It is used for the entry in the census, change and de-registration from the census of entrepreneurs, professionals and withholders.
- Model 111 (deductions in respect of workers, professionals or entrepreneurs). This form must be filed quarterly and it contains the deductions in the payrolls and invoices issued to professionals such as lawyers, notaries or tax advisors, among others. It must be filed between day 1 and 20 of April, July, October and January.
- Model 190 (yearly IRPF). It is the annual summary of model 111 and must be filed between the 1st and 31st of January.
- Model 180. It is the annual summary of mode 115 and must be filed between the 1st and 31st of January.
- Model 303 (quarterly/annual summary). It must be filed quarterly or monthly (in certain cases) and contains the issued and incoming invoices with VAT. It must be filed before the 20th of April, July, October and January 30th for the fourth quarter.
- Model 390 (annual VAT). It is the VAT annual summary and must be filed beween the 1st and the 30th of January of the year following the fiscal year to be filed.
- Model 202 (Corporate Tax-IS advanced tax payments). This form is used to make the advanced Corporate Tax payments. Later these payments will be regularized through model 200. Model 202 must be filed between the 1st and 20th of April, October and December.
- Model 200 (IS and IRNR). This form is used to declare the Corporate Tax and the Non-Resident Income Tax. The deadline extends to the 25th of July when the company’s fiscal year coincides with the natural year.
- Model 347 (third-party business transactions). It must be filed when carrying out transactions with a customer or provider for an amount greater than €30005.06 a year. It must be filed throughout the month of February.
- Model 347 (intra-Community transactions). If you carry out any transactions withing the European Union (EU) you will have to file this model. In order to be allowed to declare intra-Community transactions (sale and purchase of goods and services to and from professionals and societies from the EU) you will have to be registered in the ROI (Intra-Community Transaction Register), have a community CIF (Identification Number) and issue invoices without VAT. It can be filed monthly, quarterly or yearly, depending on the individual case.
What happens if you file the tax forms out of time?
Once reviewed the main tax models to be filed, it is key to know what can happen if by mistake you do not file a tax, file it wrongly or out of time.
In order to remedy the situation you can take the following actions:
- If you have hired a business and tax consultancy service, just analyze the situations with the corresponding experts so they can advice you and minimize the consequences.
- Take actions as soon as possible to prevent the Tax Agency from requiring you and imposing you a penalty.
- File the corresponding model or complementary declaration.
It is essential for you to know that regularizing the situation voluntarily is quite different from waiting for the Tax Agency to require you. In this second case the consequences are worse.
Now we will review both situations:
If you file the tax forms voluntarily. The Tax Agency will be entitled to impose you a surcharge that will depend on the time you took to repay your debt.
- If you filed the forms within three months after the end of the filing deadline, the surcharge will be 5%.
- Between 3 and 6 months, the surcharge will be 10%.
- Between 6 and 12 months, the surcharge will be 10%.
- If you wait more than 12 months, the surcharge will be 20%.
If the Tax Agency requires you to file the tax forms. In this situation they will be allowed to make you pay for default interests and a penalty that may vary between 50% and 150% calculated over the non-deposited amount, and will depend on the type of infringement (according to the General Taxation Law)
- Minor. The penalty base is less or equal to €3000, or it is over this amount and the act was not hidden.
- Serious. The penalty base is over €3000 and the act was hidden. For example, when false documents and supplied and/or there is a wrong maintenance of herd books.
- Very serious. This situation occurs when fraudulent means are used.
The limitation period of these infringements will be 4 years from the moment when the infringement was committed, that is, from the moment the tax forms should have been filed.
If you do not agree with the penalty imposed by the Tax Agency, basically you can take two actions:
- Filing an appeal for reversal before the institution that emitted the resolution within one month.
- Filing an economic-administrative suit within one month since the notification of the act to be suited.
In some cases the return happens to be negative (there is nothing to pay as the outcome it is equal to zero or has to be repaid). In this case, a penalty for a fixed amount (€200) has to be paid.
Nevertheless, depending on the situation the penalty could be reduced or increased.
How can Leialta help you?
In order to prevent any trouble with the Tax Agency the best thing to do is hiring a tax consultancy with experience assisting foreign customers. Leialta can draft a tax schedule so you can file all the tax forms on time with no mistakes. You will reduce your tax burden and prevent inspections and penalties from the Tax Agency. Moreover, your questions will be answered within 12 hours and in English.