The period will be extended from the entry into force of the royal Decree Law

27 March 2008. The government will approve a Royal Decree Law with a view to facilitating compliance with tax obligations relating to payments in instalments for taxpayers required to file Corporation Tax, Personal Income Tax for self-employed individuals and required to make the corresponding payments in instalments, as well as taxpayers of Income Tax for Non-Residents as they have permanent establishments located in Spanish territory following the entry into force of the new General Accounting Plan (PGC) on 1 January.

It aims to improve legal security after the entry into force of the new regulations. Under the new General Accounting Plan, companies must prepare an opening balance sheet for 2008, applying the new accounting criteria that have been harmonised with international criteria. As a result, in some cases, value adjustments must be made for certain entries at year-end 2007, with offsetting entries booked to reserve accounts.

These adjustments may have full effect in some cases, and therefore they should be taken into consideration when determining the gross tax base of Corporation Tax for 2008.

In relation to any interpretation disputes arising on certain aspects of the new General Accounting Plan, considering the short amount of time that has elapsed since the standard’s entry into force, on 1 January 2008, and the date on which the period for the first payment in instalments of Corporation Tax starts, 1 April, passing a Royal Decree Law containing the following content is advisable:

• Extension of the period for making the first payment in instalments, except for Personal Income Tax filed under the objective estimation system. The standard term, first twenty calendar days of the month of April, will be increased by an additional period following the publication of the Royal Decree Law.
• Regardless of the method applied by the taxpayer for the calculation of the payment in instalments, the option of choosing between the two following options will be addressed:
  1. Use the method set out in Article 45.2 of the consolidated text of the Corporation Tax Law (TRLIS), approved by Legislative Royal Decree 4/2004, of 5 March (Official State Gazette of 11 March), i.e. using the payment for the previous tax period to calculate the payment in instalments.
  2. Use the method set out in Article 45.3 of the consolidated text, i.e. the portion of the gross tax base obtained in the three, nine and eleven first months of 2008, with the exception of not having to include the effects of the adjustments resulting from the first application of the new General Accounting Plan in this calculation.

  This measure postpones the tax effects resulting from the necessary adjustments to adapt to the new General Accounting Plan until the submission date and guarantees legal security for compliance with the tax obligations generated by the existence of payments in instalments.

The use of the Royal Decree Law as a legal instrument is essential given that it must be approved before 20 April 2008, the date on which the period for submitting the first payment in instalments ends.