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Practical Handbook for Companies 2021

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

For instalment payments in 2022 corresponding to tax periods starting in 2021 or 2022, the amount of the payment to be made in accordance with the provisions of 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 of the period of the first three, nine or eleven months of each calendar year, determined in accordance with the rules of the LIS.The following will be deducted from the resulting tax liability : the allowances of Chapter III of Title VI of the LIS, other allowances applicable to the taxpayer, withholdings and payments on account made on the taxpayer's income, and the instalments paid during the tax period.

In accordance with the fourteenth additional provision of the LIS taxpayers whose net turnover 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 the tax rate rounded up by nineteen-twentieths.

Taxpayers whose tax period does not coincide with the calendar year will make the instalment payment on the part of the tax base corresponding to the days elapsed from the beginning of the tax period until the day before 1 April, 1 October or 1 December, 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 groupings and temporary joint ventures 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 shall not include the part of the tax base attributable to shareholders resident in Spanish territory or non-resident in Spanish territory with a permanent establishment therein.Therefore, these entities are not obliged to make fractioned payments when the percentage of participation corresponding to shareholders or members resident in Spanish territory is 100%.

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

In the case of taxpayers who are subject to foral regulations and pay taxes jointly to both Administrations, foral and state, will complete the declaration form with the information that is compatible with their respective foral regulations in order to be able to pay the corresponding part of the foral instalment payment in the Common Territory.These entities shall enter in their returns the fields for identification, chargeable event, basis for payment in instalments (box 01, box 16 or box 19), volume of transactions in the 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 of the instalment payment, it should be taken into account that may reduce from the tax base the amount of the Reserve for Investments in the Canary Islands (regulated in Article 27 of Law 19/1994) that is to be made, pro rata in each of the first three, nine or eleven months of the tax period and with the maximum limit of 90 per cent of the tax base of each of them.If the amount of the reserve actually set aside is more than 20 per cent less than the amount of the reduction in the tax base used to calculate the amount of each of the instalments paid each year, the entity will be obliged to adjust these payments for the difference between the initial estimate and the actual amount set aside, without prejudice to the payment of any interest and surcharges that may be applicable.

Minimum instalment payment

Regulation: Fourteenth Additional Provision LIS

For taxpayers whose net turnover in the 12 months prior to the date on which the tax period begins is at least 10 million euros, a minimum instalment payment is set, so that the amount payable may not be less than 23 per cent (this percentage will be 25 per cent, 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 of the financial year of the 3, 9 or 11 first

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

  • The amount of the positive result that corresponds to income derived from operations of debt write-offs or stand-by as a result of an agreement with the taxpayer's creditors, including in this result that part of its amount that is included in the taxable base of the tax period.

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

  • In the case of 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 result corresponding exclusively to non-exempt income.

  • In the case of entities to which the allowance for the provision of local public services established in article 34 of the LIS is applicable, the positive result will be taken as the result corresponding exclusively to income not eligible for the allowance.

  • In the case of entities that apply the Reserve for investments in the Canary Islands, the amount of the reserve for investments in the Canary Islands to be made in accordance with the provisions of section 1 of the fifth additional provision of the LIS.

  • In the case of entities entitled to the rebate provided for in article 26 of Law 19/1994, 50 per cent of the income entitled to this rebate.

  • 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 instalment payment, the part of the positive result that corresponds to the percentage indicated in Article 44.4 of Law 19/1994 shall not be computed, unless the provisions of letter b) of section 6 of the said Article should be applied, in which case the positive result to be computed shall be reduced by the amount resulting from applying the provisions of the said letter.

  • In the case of shipping entities to which the rebate established in sections 1 and 2 of Article 76 of Law 19/1994, of 6 July, is applicable, the positive result will be taken as the result corresponding exclusively to income without rebates.

  • In the case of entities that apply the tax credit provided for in Article 33 of the LIS, which regulates the tax credit for income obtained in Ceuta and Melilla, 50 per cent of that part of the positive result that corresponds to income that is entitled to it.

The minimum instalment payment shall not apply:

  • To the entities referred to in paragraphs 3, 4 and 5 of article 29 of the LIS and those referred to in Law 11/2009.

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

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