B Law & Tax
18 July 2023

Tax advisor: What are the implications of the introduction of minimum taxation in the 2022 Corporate Tax Campaign?

The 2022 Corporate Tax Campaign started on July 1, 2023 and will run until July 25 for those taxpayers whose tax period is the calendar year. The direct debit of the tax can be made until July 20. However, it is important to bear in mind that some companies may have a different tax period, in which case the tax return will be filed within 25 calendar days following the six months after the end of the tax period, as established in Article 124 of the Corporate Income Tax Law.

In any case, it is important to bear in mind that in this campaign several novelties related to the applicable tax rate must be considered. In particular, the following stand out:

– The application of the 15% tax rate as established in article 29.1 of the Corporate Tax Law (LIS) for emerging companies. This measure is applied in the first tax period in which, meeting the requirements to be considered an emerging company, the taxable income is positive, as well as in the following three tax periods, provided that such condition is maintained. This novelty was introduced by Law 28/2022, of December 21, on the promotion of the ecosystem of emerging companies, commonly known as the “Startups Law”, which came into force on December 23, 2022.

– The introduction of a new minimum taxation for certain taxpayers as established in Article 30 bis of the LIS. This measure is effective for tax periods beginning on or after January 1, 2022.

Application of minimum taxation

Article 30 bis of the Corporate Tax Law (LIS), incorporated by Law 22/2021, of December 28, of the General State Budget for the year 2022, establishes a minimum taxation of 15% for certain taxpayers as from tax periods beginning on January 1, 2022.

This minimum taxation of 15% applies to the following taxpayers:

– Those whose net turnover is at least 20 million euros during the 12 months prior to the beginning of the tax period.

– Those taxed under the tax consolidation regime, regardless of their net turnover.

In turn, this minimum taxation does not apply to:

– Entities that benefit from the tax regime for non-profit entities and tax incentives for patronage, which are taxed at the rate of 10% according to Article 29.3 of the LIS.

– Entities taxed at a rate of 1% according to article 29.4 of the LIS.

– Pension funds regulated by Royal Legislative Decree 1/2002, of November 29, 2002, which are taxed at a rate of 0% pursuant to Article 29.5 of the LIS.

– Listed Real Estate Investment Companies.

Amount of net tax liability

As regards the calculation of the amount of the minimum tax liability, in general terms, the net tax liability cannot be less than the result obtained by applying 15% to the taxable income, adjusted by the equalization reserve in accordance with Article 105 of the Corporate Tax Law (LIS), and reduced by the reserve for investments in the Canary Islands in accordance with Article 27 of Law 29/1994, of July 6, 1994.

However, the calculation of this minimum net tax liability must take into account certain specificities applicable in particular situations. Some of them are detailed below:

– The 15% percentage will be reduced to 10% for newly created entities, whose general tax rate is 15%.

– The 15% rate will be increased to 18% for credit institutions and those engaged in the exploration, research and exploitation of hydrocarbon deposits and subway storage facilities, whose general tax rate is 30%.

– In the case of cooperatives, the minimum net tax liability cannot be less than the result of applying 60% to the gross tax liability calculated according to their special regulations.

– In the case of entities located in the Canary Islands Special Zone, the positive taxable income on which the minimum taxation percentage is applied will not include the part corresponding to the operations carried out within the geographical scope of said zone which are taxed at the 4% tax rate according to article 43 of Law 19/1994, of July 6.

– In order to determine the minimum taxation, the rules established in paragraph 2 of Article 30 bis of the LIS must be applied:

(a) First, the gross tax liability will be reduced by the amount of the applicable allowances, including those regulated in Law 19/1994, of July 6, 1994, and the deduction provided for in Article 38 bis of the LIS (deduction for investments made by the port authorities).

  1. b) Secondly, the deductions for double taxation regulated in articles 31, 32 and 100 of the LIS will be applied, respecting the limits corresponding to each case. This includes deductions for international double taxation and in the international tax transparency regime, as well as deductions to avoid double taxation under the transitory regime as established in the twenty-third transitory provision of the LIS.

As a consequence of the above, it is possible that the result is an amount lower or higher than the amount calculated according to the provisions of paragraph 1 of article 30 bis of the LIS (applying the percentage of 15% to the taxable base, with the particularities for entities applying 10% or 18%, cooperatives and ZEC):

– If the result is an amount lower than the minimum net tax liability calculated according to paragraph 1 of Article 30 bis of the LIS, that amount will be considered as the minimum net tax liability, in an exception to the provisions of said paragraph. On the other hand, if the result is a higher amount, the corresponding additional deductions will be applicable

– On the other hand, if the result is a higher amount, the corresponding additional deductions will be applied, with the limits applicable in each case, until the amount of the minimum net tax liability is reached.

B Law & Tax International Tax & Legal Advisors.

 https://www.blaw.es/

“En B LAW&TAX somos especialistas en asesoramiento fiscal internacional tanto a empresas como para particulares. Si desea ampliar la presente información, estaremos encantados de poder atenderle en el 917817194 o en [email protected]