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Form 100. Personal Income Tax Return Declaration 2017

7.5.1.5. Small businesses

A company is considered to be small when its net turnover for the previous year was less than 10 million euros.

If the activity had been started in the previous year, the net amount of the turnover will be increased to the year.

If the activity was started in 2017, the amount of the turnover for the 2017 financial year itself will be taken into account.

To determine the net amount of the turnover, all economic activities carried out by the taxpayer will be taken into account.

When a natural person, alone or jointly with a spouse or other natural persons related by direct or collateral kinship, by blood or affinity, up to the second degree inclusive, are related to other entities of which they are partners in any of the cases referred to in article 42 of the Commercial Code, the net amount of the turnover will refer to the set of persons and entities belonging to the group.

NOTE:

As of January 1, 2011, the tax incentives established for small companies will also apply in the three tax periods immediately following the tax period in which the company reaches the aforementioned turnover of 10 million euros, provided that it has met the conditions to be considered as small in both that period and the two tax periods prior to the latter.

The provisions of the previous paragraph shall also apply when said turnover is reached as a result of carrying out an operation regulated in Chapter VIII of Title VII of the Corporate Tax Law, provided that the company that carried out such operation meets the conditions to be considered as small in size both in the tax period in which the operation is carried out and in the two tax periods prior to the latter.

FISCAL BENEFITS

Small companies can benefit from a special amortization regime for certain elements:

  1. Freedom to depreciate

    1. For job-generating investments , in the manner and conditions established in article 109 of the Corporate Income Tax Law.

    2. For low value investments : new tangible fixed assets whose unit value does not exceed 601.01 euros, up to the limit of 12,020.24 euros, per tax period (art. 110 Corporate Tax Law) also applicable to other taxpayers with economic activities.

  2. Accelerated depreciation

    1. The new elements of tangible fixed assets and real estate investments, as well as the elements of intangible fixed assets , which have been made available to the taxpayer in a tax period in which the activity is considered a small business, may be amortized by multiplying by 2 the maximum linear amortization coefficient provided for in the officially approved amortization tables.

    2. The elements of intangible fixed assets with an indefinite useful life and goodwill that cannot be amortized but in which losses due to impairment in value are deductible may be deducted by 5 percent of their acquisition value, provided that the company is considered to be of Small Size.

    3. Transitory rules: Holders of economic activities that prior to 1 January 2015 applied the depreciation of items of tangible fixed assets and real estate investments assigned to economic operations in which the reinvestment of the total amount obtained from the onerous transfer of items of tangible fixed assets and real estate investments, also assigned to economic operations, was materialized, which were depreciated based on the coefficient resulting from multiplying by 3 the maximum linear depreciation coefficient provided for in the depreciation tables, may continue to apply it.

  3. Financial leasing

    In relation to assets acquired under the special financial leasing regime, the portion of the installments corresponding to the recovery of the cost of the amortizable assets is considered a deductible expense, with a limit of three times the linear amortization coefficient according to officially approved amortization tables. The excess will be deductible in successive tax periods, respecting the same limit.

  4. Losses due to impairment of credits due to possible insolvency of debtors (art. 104 Corporate Income Tax Law)

    In addition, taxpayers who determine the performance of their activity under the direct assessment system may deduct the loss due to impairment of credits to cover the risk arising from possible insolvencies up to a limit of 1% of the debtors existing at the end of the tax period, under the conditions established in article 112 of the Corporate Tax Law.