MADRID: While Acting Treasury Minister Cristobal Montoro said the decree was a return to a fractional payment system in place from 2012-15, the new regime could require more companies to pay more in advance by practically doubling the 12 percent rate previously applied only to the taxable income of companies with more than 20 million euros in sales.
“Companies didn’t foresee this payment, and in some cases will not even have the liquidity necessary to effectuate it given a very short deadline of 20 days,” Bernardo Soto, the Confederation of Employers and Industries of Spain (CEOE)’s taxation department director and taxation committee secretary, told Bloomberg BNA Oct. 3.
Soto said companies aren’t pleased with the changes partly because they come just as the tax year is coming to an end, and haven’t had time to prepare for new rules retroactive for the entire 2016 tax year.
Moreover, the discrepancy between fractional payments on reported profits could be problematic when taxable income is less than reported profits. “For example, when a company receives dividends from foreign affiliates and that income has already been taxed abroad in accordance with corporate tax law,” an important discrepancy between reported profits and taxable income could still be subjected unfairly to the fractional payment scheme, Soto told Bloomberg BNA.
