Essential Tax Concepts and Business Obligations

Key Tax Definitions and Classifications

Fees and Special Contributions

Fees: These are taxes that are payable immediately in return for obtaining a service.

Special contributions: These are taxes that are paid as consideration for obtaining a benefit or an increase in the value of separate property as a direct result of the realization of public works or the establishment or expansion of public services.

General Taxes

Taxes: These are attributes that require no immediate or direct consideration by the administration.

• Direct Taxes: They are personal and burden economic ability.
• Indirect Taxes: They tax the economic capacity of the taxpayer when it is manifested in consumption.

The Structure of Tax Liability

Taxable event: The budget of a legal or economic nature from which originates the birth of a tax liability.

Taxable person: This is the natural or legal person who is obliged to comply with tax obligations.

Taxable income: The quantification and valuation of the taxable event, applying established legal norms.

Realizable Base: It is calculated by making certain adjustments to the tax base.

Tax rate: The percentage that, when multiplied by the base, establishes the amount of the full share of taxation.

Full Tax Fee: It is the result of multiplying the liquidable base by the tax rate.

Business and Corporate Taxation

Taxes affecting the employer: City tax, corporate tax, personal income tax, and value-added tax (VAT).

Corporate Tax (Tax on Societies)

A direct and personal tribute that falls on corporate income and other legal entities. The taxable event consists of obtaining income by entities resident in Spanish territory. The taxable person includes legal persons. The general rate of tax is 35%.

Liquidation and Deadlines

The presentation of the declaration shall be made within 25 calendar days, 6 months after the conclusion of the tax period. Consequently, for the calendar year, the deadline for submission of declarations is set at the first 25 calendar days of the month of July. However, payment is made periodically, quarterly, through a system of stage payments during the first 20 days of the months of April, October, and November.

Personal Income Tax and Estimation Systems

Income Tax: It is a direct and personal tax that falls on the income of natural persons according to their personal and family circumstances. It taxes the individual entrepreneur on the profits of their business and workers for their wages.

Direct Estimation Methods

Normal Direct Estimate: Applied to all taxpayers who conduct economic activities and do not apply other regimes. The net yield is calculated by subtracting the tax-deductible costs of the business from the income.

Simplified Direct Estimate: Available to all employers who voluntarily choose it and are not bound by the objective estimation system. Additionally, the amount of turnover should not exceed €601,012.10. The difference from the previous system is that no employer is required to keep accounts adjusted to the Code of Commerce. Furthermore, there are other differences in the computation of depreciation and amortization.