Understanding Spanish Tax Regimes and Accounting Principles

Estimate: All taxpayers voluntarily choose this system, whose activity falls within a list drawn up by the Ministry of Finance. Taxpayers are not excluded from this system for various reasons, for example, having an income higher than €450,759.08 in the previous year or having waived this regime. The net return is calculated through indicators and modules approved by the Finance Ministry.

VAT: VAT is an indirect tax levied on the consumption of goods and services rendered by contractors or professionals within the Spanish territory.

Equivalency Recharge Regime: Applies to retailers who sell products without further processing and are exempted by the regulation from VAT. It is characterized by the fact that the merchant provider, in addition to VAT, includes a special surcharge (equivalent surcharge) in the invoices. Subsequently, the trader sells the goods at the applicable tax rate but is exempt from the obligation to issue invoices, record sales, and liquidate taxes. For each type of VAT equivalence, there is a surcharge: 16%, 4.7%, 1.4%, 0.5%.

Patrimonial Elements: These are the different parts that constitute the assets of a company. These assets and liabilities are represented and measured by accounting records through specific accounts, denominated instruments.

Accounting: The branch of knowledge responsible for the proper measurement and representation of patrimonial variations. It provides dual information: one economic and the other financial.

Types of Accounts:

• Internal or Analytic: Studies and records results by product group or sections, based on the calculation of financial costs.
• External: Its goal is to describe the overall image and performance of the business's assets.

Cost accounting is determined by each employer according to their characteristics and information needs, while external financial accounting is subjected to a normalization process, ensuring the information offered is comparable and measurable.

Assets Available: Grouping of patrimonial elements that are functionally the same, economically or financially homogeneous. The different elements that make up the assets of a business can be grouped into two large masses of property: Assets: Is the set of assets, rights, and other resources controlled by the company financially, resulting from past events, from which economic profits or earnings are expected in the future. The assets represent the economic structure of the company, while equity and liabilities represent the financial structure. The fundamental accounting equation must always be met: Assets = Net Assets + Liabilities.