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Practical Handbook for Companies 2021

Tax period and accrual of corporate income tax

1.Tax period

Regulation: Article 27 LIS

(a) General rule

The tax period referred to in the corporate income tax return must coincide with the entity's financial year , but in no case may it exceed twelve months.

Except in cases where a different period is declared, the tax period shall be understood to refer to calendar year.

b) Special rules

Even if the financial year has not ended, the tax period shall in any case end:

  1. When the entity is extinguished.

    The entity will be extinguished when the cancellation entry is made in the Mercantile Register, and the entity will be obliged to file a tax return within 25 calendar days following the six months after the entry is made.

  2. When there is a change of residence of the entity resident in Spanish territory to a foreign country.

  3. When the transformation of the legal form of the entity takes place and this determines the not subject to corporation tax of the resulting entity.

  4. When the transformation of the corporate form of the entity, or the modification of its statute or its legal regime, takes place and this determines the modification of its tax rate or the application of a different tax regime.

c) Summary

The duration of the tax period can be:

  1. Equal to twelve months

    • coinciding with the calendar year
    • not coinciding with the calendar year
  2. Less than twelve months

    In any case, those who pay Corporation Tax must submit a separate tax return for each tax period.

    Example:

    Company "X", a cereals trader, has established in its articles of association that its financial year coincides with the calendar year.

    In order to adjust the financial year to the cereal marketing year calendar, the General Shareholders' Meeting, validly constituted for this purpose, resolved on 19 April 2021 to modify the company's financial year, which will start on 1 June of each year and close on 31 May of the following year.

    Consequently, on 31 May 2021, the current financial year (which had begun on 1 January) will be closed, and the first of the financial years in accordance with the modification agreed by the General Meeting will begin on 1 June 2021.

    In this case there are two taxation periods, both starting within the same calendar year of 2021:

    1. From 1 January 2021 to 31 May 2021.
    2. From 1 June 2021 to 31 May 2022.

    Therefore, Company "X" will have to file two corporate income tax returns, one for each of the above-mentioned tax periods.

2.Liability

Regulation: Article 28 LIS

Corporate income tax is payable on last day of the tax period.