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Royal Decree-Act 1/2015, of 27 February, on the second chance mechanism, debt reduction and other measures on the social agenda. (Official State Gazette of the 28th)

Royal Decree 1/2015, of 27 February has been published, in the Official State Gazette dated 28 february 2015, regarding the second chance mechanism, debt reduction and other measures on the social agenda that introduce the following tax changes relating to Corporation Tax:

Reduction of formal obligations for partially exempt entities regulated in article 9.3 of Law 27/2014 on Corporate Tax.

For tax periods starting on 1 January 2015, article 124.3 Act 27/2014 on Corporation Tax (LIS) is modified with the aim of relieving partially exempt companies governed in article 9.3 LIS from compliance with formal obligations.

Article 7 of Royal Decree 1/2015 establishes exemption from the obligation to file Corporation Tax return for partially exempt companies, which fulfil specific requirements, provided that these are not subject to Act 49/2002, of 23 December, of the tax regime for nonprofit organisations and of tax incentives for patronage, nor in the case of political parties.

Partially exempt companies, of article 9.3 LIS, whose total revenue during the taxable period does not exceed €50,000 per year, are excluded from the obligation of filing Corporation Tax, provided that the total amount of revenue corresponding to non-exempt income does not exceed €2,000 per year and that all non-exempt income is subject to withholding.

Companies partially exempt from Corporation Tax, regulated in article 9.3 LIS, are the following:

  1. Nonprofit companies and organisations, to which the tax regime regulated in title II of Act 49/2002, of 23 December, of the tax regime for nonprofit organisations and of tax incentives for patronage, is not applied.
  2. Unions, federations and confederations of cooperatives.
  3. Professional associations, business associations, official Chambers and trade unions.
  4. Employment Promotion Funds set up under article twenty-two of Act 27/1984, of 26 July, on restructuring and re-industrialisation.
  5. Mutual Funds associated with the Social Security, regulated in the revised text of the General Act on Social Security, approved by Royal Legislative Decree 1/1994, of 20 June.
  6. The Public act entities Puertos del Estado, and those from Autonomous Communities, such as Port Authorities.

Article 124.3 LIS states the following:

3. Taxpayers referred to in sections 2, 3 and 4 of article 9 of this Act are obliged to declare all their income, both exempt and non-exempt.

Taxpayers referred to in section 3 of article 9 of this Act are not obliged to file a tax return when they fulfil the following requirements:

  1. Their total revenue shall not exceed €50,000 per year.
  2. Revenue corresponding to non-exempt income shall not exceed €2,000 per year.
  3. All non-exempt income obtained is subject to withholding.