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Practical Manual for Companies 2020.

The method described in article 40.3 of the LIS. Minimum payment by instalments

For fractional payments for the year 2021 that correspond to tax periods beginning in 2020 or 2021, the amount of the payment to be made as established in article 40.3 of the LIS , will be the result of applying the percentage resulting from multiplying by five-sevenths the tax rate rounded down, on the part of the taxable base for the period of the first three, nine or eleven months of each calendar year, determined according to the rules of the LIS. From the resulting quota will be deducted the bonuses of Chapter III of Title VI of the LIS, other bonuses that are applicable to the taxpayer, the withholdings and payments on account made on the taxpayer's income, and the fractional payments made corresponding to the tax period.

In accordance with the Fourteenth Additional Provision of the LIS taxpayers whose net turnover amount in the 12 months prior to the date on which the tax period begins is at least 10 million euros , the percentage referred to in the last paragraph of article 40.3 of the LIS will be the result of multiplying by nineteen-twentieths the tax rate rounded up.

Taxpayers whose tax period does not coincide with calendar year will make the fractional payment on the part of the taxable base corresponding to the days elapsed from the beginning of the tax period until the day before April 1, October 1 or December 1, depending on the corresponding period. In these cases, the instalment payment is on account of the payment for the tax period in progress on the day before the beginning of each of the above-mentioned payment periods.

In the case of Spanish economic interest groups and temporary business associations covered by the special regime regulated in Chapter II of Title VII of the LIS that apply this modality of Article 40.3 of the LIS, the calculation base will not include the part of the tax base attributable to partners resident in Spanish territory or non-residents in Spanish territory with a permanent establishment therein. Therefore, these entities are not obliged to make fractional payments when the percentage of participation corresponding to partners or members resident in Spanish territory is 100 percent.

In the case of taxpayers who are subject to both state and regional regulations and jointly pay taxes to the State and the Provincial Councils of the Basque Country and/or the Foral Community of Navarre, the basis for the split payment will be the proportional part that corresponds to each of these Administrations, taking into account the volume of operations carried out in each territory determined according to the volume of operations carried out in each territory according to the last tax return-settlement.

In the case of taxpayers who are subject to regional regulations and jointly pay taxes to both regional and state administrations, they will complete the declaration form with the data that is compatible with their respective regional regulations in order to be able to enter into the Common Territory the corresponding part of the regional fractional payment. These entities will record in their declarations the fields of identification, accrual, basis of the fractional payment (box 01, box 16 or box 19), volume of operations in Common Territory (%) (box 29) and the amount to be paid (box 03 or box 34).

For the purposes of the provisions of article 40.3 of the LIS, in accordance with the Fifth Additional Provision of the LIS , when calculating the base for the split payment it must be taken into account that the amount of the Reserve for Investments in the Canary Islands (regulated by article 27 of Law 19/1994) that is expected to be made may be reduced from the tax base, prorated in each of the periods of the first three, nine or eleven months of the tax period and with a maximum limit of 90 percent of the tax base for each of them. If the amount of the reserve actually provided is less than 20 percent of the amount of the reduction in the tax base made to calculate the amount of each of the fractional payments raised to the year, the entity will be obliged to regularize said payments for the difference between the initial provision and the effective provision, without prejudice to the settlement of the interest and surcharges that may be applicable.

Minimum payment by instalments

Regulation: Additional Provision Fourteenth LIS

For taxpayers whose turnover in the 12 months prior to the start of the tax period is at least 10 million euros , a minimum split payment is set , such that the amount to be paid may not be less, in any case, than 23 percent (this percentage will be 25 percent , in the case of taxpayers to whom the tax rate provided for in the first paragraph of article 29.6 LIS applies) of the positive result of the profit and loss account for the financial year of the first 3, 9 or 11 months of each calendar year.

However, there are certain concepts that will be excluded from the positive result referred to:

  • The amount of the positive result that corresponds to income derived from debt reduction or waiting operations resulting from an agreement with the taxpayer's creditors, including in said result that part of its amount that is integrated into the taxable base of the tax period.

  • The amount of the positive result resulting from capital or equity increase operations by offsetting credits that is not included in the tax base by application of article 17.2 of the LIS.

  • If it is a partially exempt entities to which the special tax regime established in Chapter XIV of Title VII of the LIS applies, the positive result will be taken as the one corresponding exclusively to non-exempt income.

  • If the entities are subject to the bonus for the provision of local public services established in article 34 of the LIS, the positive result will be taken exclusively as the one corresponding to non-subsidized income.

  • If the entities apply the Reserve for investments in the Canary Islands, the amount of the reserve for investments in the Canary Islands that is expected to be made in accordance with the provisions of section 1 of the fifth Additional Provision of the LIS.

  • If the entities are entitled to the bonus provided for in article 26 of Law 19/1994, 50 percent of the income that is entitled to said bonus.

  • In the case of entities that apply the tax regime of the Canary Islands Special Zone , regulated in Title V of Law 19/1994, for the purposes of the minimum split payment, the part of the positive result that corresponds to the percentage indicated in article 44.4 of Law 19/1994 will not be computed, unless the provisions of letter b) of section 6 of said article are to be applied, in which case the positive result to be computed will be reduced by the amount resulting from applying the provisions of that letter.

  • In the case of shipping entities to which the bonus established in article 76, sections 1 and 2, of Law 19/1994, of July 6, is applicable, the positive result will be taken exclusively as corresponding to non-bonus income.

  • If it concerns entities that apply the bonus provided for in article 33 LIS, which regulates the bonus for income obtained in Ceuta and Melilla , 50 percent of that part of the positive result that corresponds to income that is entitled to it.

The minimum split payment will not apply:

  • To the entities referred to in sections 3, 4 and 5 of article 29 of the LIS nor those referred to in Law 11/2009 .

  • To the venture capital entities regulated by Law 22/2014, of November 12.

  • To the shipping entities that apply the special regime based on the tonnage regulated in Chapter XVI of Title VII of the LIS.