3. Corporate Tax

In 2020, income from Corporate Tax lost a third of what was collected in 2019 (-33.2%), standing at 15,858 million. You have to go back to 1999 to find a lower figure. However, these data do not give a full idea of what happened in 2020 with the main determinant of the tax, corporate profits. Part of the decline did not have to do with the poor results of the companies, but with the management of returns. In the 2018 declaration, presented in 2019, the amount of refunds requested was very large. If this negative impact is corrected, along with the positive one provided by some extraordinary income and the one caused by the comparison with the year 2019 in which there were extraordinary returns, the decrease would be around 23%, more in line with the drop in profits. and the tax base of the tax.

Indeed, it is estimated that the consolidated tax base fell by 17.9% in 2020, somewhat less than profits, whose decline was 25.9% (Table 3.1). In the latter case, the rate exceeds those recorded in the previous crisis, after the real estate boom (Graph 3.1). The information provided by Large Companies and consolidated groups in their statements of installment payments (Table 3.2) allows us to see that the reduction in the tax base was greater than the fall of the group of companies (-22.5%) and the same thing happened in profits (-34.5%). The collapse was particularly intense in the groups in which the reduction in profits reached 44% and the reduction in the tax base was 31.5%. This strong impact on the tax base of companies was observed since the beginning of strict confinement with losses close to 14% in the first quarter. In the central semester of the year (the second payment includes the settlement between April and September) the drop was, as in many other variables, of around 25%. In the last quarter, losses were reduced to 6.3%.

One point to note with the available results is that the level of tax generated by these benefits was similar to that in the years 2014-2015. However, the level of profits in 2020 was around 12% higher than it was then (Chart 3.2). The disparate evolution of profits, tax base and accrued tax shows the process of slow erosion that occurs in the effective rate (Table 3.1; Graph 1.16), especially the one calculated on the positive results and despite the fact that in the specific case of this year there is a slight growth in it and a drop in the effective rate on the tax base (-4.5%). The causes of this trend, which, together with the low tax rates of some companies, are one of the most notable characteristics of the tax, can be analyzed with the information offered in Table 8.5.

Given the fall in the base and the effective rate, the Corporate Tax accrued decreased by 21.6% in 2020 (Table 3.1). The data contains an estimate of the differential fee that will be known starting in July, although this time, unlike the previous two years, its weight is not so significant (without that fee the drop in the tax would be 24.6%) by losing importance in the contribution of the minimum payment within the installment payments, one of the main causes of the discrepancies between the payments and the liquid installment finally accrued. The tax was not affected by the regulatory changes because all of them were aimed at facilitating compliance with tax obligations without altering the amount payable.

The majority of the tax is made up of installment payments, which in 2020 fell by 25.4% (Table 3.2). The drop was greater in the groups (-37.6%), which is explained, in addition to the worse evolution of their benefits, by the weight that the minimum payment had on these taxpayers, linked to the benefits and not to the tax base. In the rest of the companies, large non-group companies saw their payments fall by 15.7% and SMEs by 5.1% (-1.9% for those that calculated the payment according to their last annual installment and -14.7 % those who paid taxes according to the profits of the year). Graph 3.3 represents the evolution of the installment payments of the different companies since 2018. Although their impact on the total is very different and their characteristics also differ greatly, the trajectories show great coherence, only broken by SMEs that pay taxes according to the quota, whose payments, regardless of real activity, follow the pattern of successive steps that begin with the second payment (after the presentation of the annual return in July) and last three payments (the graph data can be downloaded at this link ).

In 2020, cash income from Corporate Tax decreased by 33.2% (Table 3.1). A no small part of the drop was due to the making of returns for the 2018 financial year. It must be remembered that these refunds were requested in 2019 and, as usual, were paid between the end of 2019 and the beginning of 2020. Those of 2018 were, in addition, exceptionally high because the fractional payments that were entered at the time had also been high. Added to this was the delay in making returns. Table 3.3 and Graph 3.4 show in which year (t and t+1) the requested refunds were made in any year t. In both it is clear that the percentage of returns made in 2019 was lower than in previous years. However, the impact of this displacement was cushioned by the existence of extraordinary income from judgments and by the comparison with the year 2019 in which there were returns also for this reason and for the DTA (Deferred Tax Assets) payments to some companies (Table 1.5). If all these elements are corrected, income would have fallen 10 points less, around 23%, a figure very similar to that estimated for the accrued tax (-21.6%). All these mismatches between accrual and cash can be seen in the “passage from accrual to cash” part of Chart 3.5.

The second element, extraordinary income and returns from sentences and DTA, accounted for most of the regulatory changes, but they were not all. The total net impact of the regulatory and management changes was positive and amounted to 1,669 million, which was broken down as follows: 1,295 million came from the extraordinary returns that were made in 2019; 1,081 million of extraordinary income in 2020; -406 million returned in interest due to the ruling of unconstitutionality of RDL 2/2016, which modified the way in which payments divided by the ruling were calculated; and -301 million for the measures linked to the fight against COVID, both in its aspect for the fulfillment of tax obligations through postponements and suspension of deadlines (-211 million), and in its aspect of reducing payments to small companies companies (-90 million).