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Fiscal Year 2022

3. Corporate Tax

income from Corporate Tax grew by 20.8%, fundamentally reflecting the very favorable evolution of profits in both 2022 and 2021. The former were manifested in a strong increase in installment payments (17.7%), also generalized by type of company, although especially high in consolidated groups and, within them, in groups in the banking and energy sectors. The benefits of 2021 translated into considerable growth (41.7%) in income from the annual return, mostly from the 2021 return submitted in July 2022. The impact of this increase on total tax revenue was offset by the increase in refunds (26.6%) as a result of the increase in applications in the last campaign (about 5,000 million more than the previous year), the advance in the realization of said refunds compared to last year and the existence of extraordinary refunds derived from sentences or linked to deferred tax assets (DTA).

The consolidated tax base of Corporate Tax grew by 20.8% ( Table 3.1 ), linking two years of strong increases (in 2021 the increase was 35.5%, although the comparison was made with the year with the highest incidence of the pandemic). Profits also grew at a good pace, 17% (36% in 2021). These increases, already notable in themselves, are even more so if we take into account that they are compared to a year in which extraordinary operations were recorded (a bank merger and the sale of assets by a large company). In the case of fractional payments ( Table 3.2 ), the benefits of the consolidated groups rose by 14.9%, reaching almost 60% for those who paid taxes according to their minimum payment, while for Large Companies not integrated into groups the increase is estimated at 19%.

Graph 3.1 shows the data for 2022 in the context of the evolution of the tax in the last 15 years. The benefits of 2022 represent a new maximum in the historical series, surpassing that achieved in 2019. Compared to 2007, the year with the maximum collection of Corporate Tax, profits are 50% higher than then. However, the tax base and accrued tax are still below the 2007 records. The same happens with the collection, which continues to be lower than that achieved in the period 2005-2007. The detailed evolution of the tax since 1995 can be analyzed with Table 8.5 . Graph 3.1. Evolution of corporate profits, tax base and tax accrued in Corporate Tax (base 2007=100).

The effective rate on the tax base remained practically stable (+0.2%; Table 3.1 ; Graph 3.5 ), following the trend of recent years (the 2022 rate is the same as that of 2017) and as a logical consequence of regulatory stability. In the case of the rate on profits, which depends not only on regulations, but also on the different pace of profit growth in different types of companies, it is estimated that it will rise by 3.5%, although the level is still lower than average type that was observed before 2018.

The Corporate Tax accrued increased by 21% ( Table 3.1 ), a rate similar to that estimated for the tax base. The increase in the tax accrued is greater than 5,300 million, of which almost 4,350 million correspond to the largest installment payments, the main concept within the tax. Fractional payments grew by 17.3% ( Table 3.2 ), although the rate would reach 24.4% if the extraordinary income that occurred then is not taken into account in 2021. The favorable performance of the bases and the greater contribution of payments based on profits (minimum payment) were the cause of the strong growth in payments. Graph 3.2 shows the evolution by type of taxpayer. The payments of the consolidated groups grew by 16.3% (35.7% without the extraordinary ones in 2021) thanks to the contribution of the minimum payment (2,943 million more than the previous year). In the case of Large Companies not belonging to groups, the increase in payments was 19.2%, 3 points less than in 2021, although that year was compared to the year of the pandemic. For their part, SMEs, as a whole, saw their payments increase by 17.1%. It must be remembered that these companies can make the payment in installments according to the last annual installment presented or according to the profits of the period. In the first group, the increase in payments in 2022 was 17.6% (1.2% in 2021, a year in which most of the payments had the year 2020 as a reference), while in the second the increase rose to 16%.

Graph 3.2. Evolution of the amounts of installment payments by type of taxpayer: SMEs according to quota, SMEs according to results, Large non-group companies and Consolidated groups.

Graph 3.3. Relationship between the contribution of the minimum payment on the total of the installment payments and refund requests in the annual Corporate Tax declaration.

In the rest of the tax, it is only worth noting that, as has happened in previous years, the behavior of payments, and in particular the minimum payment, with high incomes, conditions the evolution of the differential fee. Graphs 3.3 and 3.4 illustrate this situation. The high percentage of income from minimum installment payments (almost 26% of total payments in 2022) also implies a high amount of refund requests when the annual declaration is submitted and, consequently, a negative differential fee. Chart 3.3 shows the relationship between the percentage of the minimum payment and refund requests and Chart 3.4 shows its effect on the differential fee: Since payment rates were raised in 2011 and, above all, since 2012 when this minimum payment dependent on profits and not the tax base was introduced, the differential rate has always been negative, unlike what happened previously. ( Table 3.3 ).

Graph 3.3. Relationship between the contribution of the minimum payment on the total of the installment payments and refund requests in the annual Corporate Tax declaration.

Graph 3.4. Evolution of the amount of income from Corporate Tax and its breakdown between differential fee and fractional payments and withholdings.

revenues in cash terms grew by 20.8% (Table 3.1) in line with the evolution of profits and bases in 2022 and 2021. The two concepts that most boosted collection were installment payments and income from the annual declaration.

Fractional payments, which are the main component of the tax and are linked to the year's profits, grew by 17.7% and the increase would be even greater if the extraordinary income that occurred in 2021 is not taken into account.

For its part, annual declaration income grew by 41.7%. Income that comes exclusively from the settlement of fiscal year 2021 rose by more than 45%, which is explained by the growth in profits in 2021 (36%). Part of these high rates is due to the poor results of 2020, but the 2022 figures are also better than those recorded before the pandemic ( Table 3.1 ).

Revenue growth was limited by the increase in returns made (26.6%), which is due to three reasons ( Table 3.3 ): the increase in refund requests from the 2021 campaign, the streamlining of their execution, and the existence of extraordinary refunds due to rulings and the management of deferred tax assets (DTA).

Regarding the first point, we must remember that, in any year, the refunds made in the Corporate Tax mix two campaigns: In the first months, most of the refunds requested in the previous year's campaign are paid (in 2022 those for the 2020 financial year), while in the final months the amounts requested in the following campaign begin to be returned (in this case the 2021). In 2022, the returns made in the first months were lower than those of the previous year by around 2,000 million due to the lower requests for fiscal year 2020, but, on the other hand, the returns corresponding to 2021 practically doubled due to the increase in requests and the advancement in the implementation schedule.