3. Corporate Tax

In the Corporate Tax collection grew by 9% to 35,060 million. The profits of the companies increased by more than 10% in 2023 and represent the new maximum in the historical series, exceeding the level reached in 2019 (4% more). In the case of the benefits of installment payments of Large Companies and groups, the growth was above 15% (17% in Large Companies and 14.3% in groups), which resulted in an increase similar to the collection by installment payments, the main component of income in this figure. The growth of these profits was very high in the first months of the year, especially in the groups (and, especially, in the energy and financial sectors), it moderated in the central part of the year, which was also compared to very good results from the previous year, and recovered in the final stretch of the year. Part of the increase was due to the regulatory change that came into force at the beginning of 2023 by which the tax base of a group was calculated in 2023 by adding the positive tax bases and 50% of the negative tax bases of the member entities of the group.

Also the positive quota of the annual declaration, corresponding to the settlement of the year 2022, experienced notable growth, greater than 12%. As with payments, there was a regulatory change that boosted income; in this case the minimum rate of 15% which, although it was approved in the 2022 Budget, had its first application in the 2022 declaration presented in 2023.

Despite these two elements, overall revenue grew by only 9% as a result of the high amount of returns in 2023, which is explained, in turn, by two reasons: the existence of a large volume of refund requests from the 2021 financial year (which were paid at the beginning of 2023) and the advance in the schedule for making refunds for the 2022 campaign.

The consolidated tax base of Corporate Tax grew by 19.5%, a notable increase, even more so if we take into account that it is the third year with high records (18.7% in 2022 and 36% in 2021, Table 3.1 ). Graph 3.1 shows the evolution of the tax in the last 18 years, based on the year 2006, a year in which both the tax base and the accrued tax reached their maximum amounts until 2023. Compared to 2006, profits were 43.1% higher in 2023 than then, while the tax base was only 11.5% higher, although for the first time above the previous maximum that had been reached in 2006. . For its part, the tax accrued is still below the records of that year, as is the case with collection. The detailed evolution of the tax since 1995 can be analyzed with Table 8.5 .

The effective rate on the tax base grew by 2.5% after the 0.8% increase in 2022, due to the effect of the aforementioned regulatory changes ( Table 3.1 ; Graph 3.5). 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 and the relationship between profits and base, it is estimated that it will rise by 10.8%. . In this sense, we must warn, on the one hand, about the distortions that companies that pay taxes at 0% and 1% rates with very irregular profits (linked to the valuation of their assets and, in turn, are generating in recent years). , dependent on increases in interest rates and the reactions of financial markets) that affect total profits, but only the accrued tax or income given their little or no taxation. On the other hand, in the last three years there has been a progressive approach between the tax base and profits. In Graph 3.2 you can see this movement that has to do, fundamentally, with the minor adjustments derived from the double taxation exemption ( Table 8.5 ) whose regulation was modified in fiscal year 2021.

The Corporate Tax accrued increased by 22.5% in 2023, 13.7% without the differential fee ( Table 3.1 ), thanks to the increase of 15.2% in installment payments, which already links three years of strong increases. This year they were also favored by the regulatory change that affected the calculation of the groups' tax bases. The payments of the consolidated groups grew by 14.6%, with a lower contribution from the minimum payment, which grew by 9.1% (712 million more than the previous year, compared to the 2,943 million increase in 2022). The growth in payments from Large Companies not belonging to groups was somewhat higher, at 17.8%, and in this case the increase in payments calculated according to the tax base was also higher (19%, compared to 8.9%). % of those who go for the minimum payment modality). For their part, payments from SMEs grew at a rate of 12.3%. The greatest increase was observed in the SMEs , the majority, which paid taxes according to their last annual installment (17.8%), while the payments of the companies that declared according to the profits of the year were reduced (-1.2%).

Graphs 3.3 and 3.4 illustrate the relationship between payments and differential tax until completing the entire tax accrued. In the years 2021 and 2022, the high percentage of income from minimum installment payment also implied a high amount of refund requests and a negative differential fee. It is expected that the reduction in the weight of the minimum payment in 2023 to 20.4% will lead to a lower amount of refund requests when the annual declaration corresponding to the year is presented and, consequently, that the differential fee will be of a magnitude reduced ( Table 3.3 ).

income in cash terms grew by 9% ( Table 3.1 ). 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, grew by 15.2%, in line with the benefits associated with the fractional payments of Large Companies and groups.

The contribution of income from the annual declaration, which increased by 12.1%, was also positive. Income from the settlement of fiscal year 2022 increased by 11.3%, which is explained by the growth in profits in 2022 of companies without including companies that pay taxes at 0% and 1% ( Table 3.1 ). We must also add the effect of the new minimum rate of 15% applicable to groups and other companies with a turnover of more than 20 million, a measure that, when approved in the 2022 Budget, had its first effect on the fiscal year 2022 whose declaration was presented in 2023.

One of the notable features of the year was the importance of the refunds of this tax, especially in the first part of 2023, although its effect conditioned the evolution of income throughout the year. The returns of the result of the annual declaration, including those derived from settlements, were 21% higher than those of 2022 ( Table 3.3 ), which had already reached a high amount (only surpassed by those that were made in 2020). The two reasons that explain this increase were, on the one hand, the existence of a large volume of refund requests for the 2021 financial year, which grew by 78.5% and most of which were paid in 2023, and, on the other, the advance in the calendar for making returns for the 2022 campaign (declarations submitted from the end of July 2023). This high growth in refunds explains most of the discrepancy between the increase in tax accrued and that in income. The cash-to-accrual shift graph in Figure 3.5 illustrates that effect.