Fiscal developments in 2017: increases and constraints in Corporate Tax and Property Tax

Fiscal developments in 2017: increases and constraints in Corporate Tax and Property Tax

Application of the changes in Corporate Tax and Property Tax introduced by the government a month ago started on New Year’s Day. They will affect large companies and municipalities.

Some of the tax changes approved by the Spanish government in a Royal Decree Law on 3rd December came into force on the first day of the year. Among the developments, the increase of Corporate Tax and Property Tax stands out, along with other measures on tax information companies have to provide.

In this way, large companies will not be able to deduct losses from share selling or integrate the negative income from permanent establishments abroad. The exemption of dividends and capital gains on the transfer of non-resident shares will also be limited. The changes are as follows:

1.- Obligation to provide information “country by country”: applies to companies that, alone or as part of a group, have a net turnover (INCN) in the twelve months prior to the start of the tax period of, at least, 750 million Euros.

2.- Instalment payments: affects companies with a net turnover of at least 10 million Euros. The rate will be 24% of the amount on the taxable base for those companies listed in the Spanish general scheme.

3.- Ceiling on the compensation of negative tax bases (BIN): applies to companies with net turnover of at least 20 million Euros. Certain tax credits can be reversed at 50% of the tax base. If the company has a net turnover of 60 million Euros or more, the ceiling will be 25%.

4.- New ceiling for the application of deductions for double taxation: these discounts can be applied to double taxation both domestic and international, with a maximum ceiling of 50%. Only applicable to companies with net turnover of at least 20 million Euros and affecting:

– Domestic double taxation on resident companies’ shares; taxes carried out abroad and securities acquired before tax year 2015.

– International economic and juridical double taxation.

5.- Review of the cadastral values: they affect the Property Tax of 2,452 municipalities throughout Spain. These values will be updated with a table of coefficients ranging from 1’08 to 0’87 and will be applied to buildings built between 1984 and 2011.

With these new fiscal changes the Spanish government aims to balance the deficit agreed with Brussels and raise 4,650 million Euros.

At Del Canto Chambers we are specialised in tax and commercial law and can be reached at clerk@delcantochambers.com.

Claudio Rodríguez Vera (@rvclaudio)

Lawyer at Del Canto Chambers

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