Explanatory notes and sources

The analysis scheme: Tax bases, effective rates, accrued taxes and tax revenues

The basic structure of the analysis of tax revenues (IT) carried out in this report is based on the following identity:

IT = BI * RD/BI * IT/RD,

where BI is the taxable base of the tax, RD is the revenue accrued by it, RD/BI is the average effective rate and IT/RD is a ratio that reflects the differences between the time of accrual and the time of payment. This expression condenses the process of generating tax revenues. First, a flow of goods, services, income, etc., subject to taxation (BI), is produced, to which a rate is applied (RD/BI), giving rise to accrued revenue (RD). Next, the tax collection process (IT/RD) begins, which determines the tax payment at a time generally after the accrual.

This identity summarizes the analysis method used both in its numerical and graphic information and in the comments that accompany it. Tax revenues are reported, but an attempt is made to identify the underlying causes of their variations through the analysis of the three components of the identity: the tax base, the effective rate and the adjustment between accrual and cash.

Taxable bases

The basic source of information on tax bases is the annual statistics available on the AEAT website (Statistics). Data for years for which the corresponding statistics have not yet been published have been estimated using information available from the same sources used to prepare these publications; These are therefore provisional data.

The demographic figures in the tables of the report are also mostly taken from annual statistics, which ensures a consistent evolution of the taxpayer population and the tax bases for each tax. These figures may differ in some cases from those contained in the Tax Agency Report which are based on different preparation criteria regarding the scope and time of registration.

Taxes accrued

The AEAT tax management procedure is based on a system of self-assessments and declarations. The system assumes that taxpayers required to file a tax return according to the regulations of each tax must determine the tax debt (self-assessment) at the same time as they submit a self-assessment return containing the code of the tax return model, the accrual period, the taxpayer identification and the result of the settlement that the taxpayer himself calculates based on declared economic and personal data.

The taxes accrued are basically calculated by aggregating the self-assessment declaration forms submitted by taxpayers. Gross accrued taxes are obtained by adding, for each declaration model, the amounts of the declarations whose result is in favor of the Public Treasury, regardless of the time at which they were paid. Net accrued taxes are the result of subtracting from gross taxes the amounts of the returns in which the balance is in favor of the taxpayer and gives him the right to request a refund.

The data from the self-assessment declarations are completed with information from the information models, which are those models that, without a liquidation nature, summarize and complement the content of the periodic declarations and whose purpose is to control the correct fulfillment of tax obligations. These models are used, for example, to allocate the withholdings on movable capital, leases and investment funds among the different tax figures (IRPF, Corporate Tax and Non-Resident Income Tax).

By definition, the taxes accrued are consistent with the tax bases (income, profits, sales and consumption) declared in the models. Consequently, the effective tax rate for each tax figure is the quotient between the net tax accrued and the taxable base.

The taxes accrued are subject to change even years after the end of the reference year, since taxpayers may submit their self-assessments after the deadline, either voluntarily or at the request of the Administration. The figures for taxes accrued in the report for the last two years are therefore provisional.

Tax revenues

Tax revenues are cash revenues and are expressed, unless otherwise indicated, in net terms, i.e. as the difference between gross revenues and refunds made. This income measure complies with the Accounting Instructions of the General Intervention of the State Administration (IGAE). The figures are comparable to those included in the Tax Administration Report whose source is the IGAE.

There is an equivalence between the self-assessments that are behind the taxes accrued and the concepts of the AEAT Accounting Information System from which the income figures are extracted in terms of cash. Each self-assessment is assigned a different model according to the type of tax and the type of taxpayer involved. For its part, the Accounting Information System associates each model or group of models with one or more budget keys. This equivalence between tax return models and budgetary concepts allows the association of tax revenue flows with relevant categories of taxpayers (public administrations, large companies, SMEs, consolidated groups and others) and, ultimately, with the economic flows that have given rise to the tax obligation. However, there may be differences in the criteria for classifying revenue flows between the declaration models and budgetary concepts. An example of these differences is the allocation of withholdings on capital assets, leases and investment funds between the different types of tax (IRPF, Corporate Tax and Non-Resident Income Tax): In accrued taxes, the allocation is made according to the legal personality of the taxpayer (physical, legal, non-resident), while accounting-wise it is done with fixed percentages between the different figures.

In 2017 and 2018, tax revenues are presented, in some cases, corrected for the impact that the implementation of the Immediate Information Supply (SII) system on VAT had in those years. The introduction of this management system resulted in a shift in revenue from 2017 to 2018. In order to obtain homogeneous series over time that allow for adequate measurement of growth, the most relevant series are corrected for this displacement. The correction is made on an annual basis, which may cause small discrepancies with the figures published in the monthly collection reports, in which the correction is made on a month-by-month basis to provide a good measure of the monthly variation.

The analysis of revenues in this report is carried out in total terms, that is, before deducting the contributions to which the Territorial Administrations (Autonomous Communities and Local Corporations) are entitled according to the territorial financing system. This participation becomes effective in each of the years through, basically, advance payments and final settlements of fiscal year t-2. Detailed information on these participations can be found in Tables 7.3 , 7.4 and 7.5 of the report, as well as the State's income after deducting these participations ( Table 7.7 ). In addition, information on relations with the Provincial Treasuries is also provided in Table 7.6.

The budgetary scope of tax revenues analysed in the report covers Chapter I (except for fees for passive rights), Chapter II and the rates and other tax revenues (which contain surcharges, penalties and interest) of Chapter III. A complete overview of the State's non-financial revenues, including non-tax revenues, can be found in Table 7.8 .

The report also presents tables of tax revenues in terms of recognized rights ( Table 7.10 and Annex: Recognized rights ). Regarding tax revenues in cash terms, the recognized rights exclude revenues from closed fiscal years and include the rights of the fiscal year pending collection. They also adhere to the Accounting Instruction cited above.

Tax revenues by Delegations

The additional files accompanying the report present information on tax revenues distributed among the 56 Delegations (grouped, where appropriate, into Special Delegations) and the Central Services.

Since the allocation of taxpayers by Delegations is done according to their tax domicile, the tax revenues of a Delegation are not necessarily a good indicator of the fiscal importance of the territory or of the economic activity in it. Nor is the annual variation in tax revenues managed by a Delegation an adequate sign of the fiscal or tax collection dynamism of the territory. In addition to the disruptions that may affect income throughout the territory, in the Delegations there are problems caused by changes in the tax domicile of taxpayers (especially when it is a large company) or by the processes of mergers and absorption of companies. Furthermore, in some tax figures, such as Special Taxes, the income can be assigned either to the Delegation where the tax warehouse through which the product leaves is located, or centrally to the Delegation where the company that owns the warehouse is domiciled.