Many business owners are unaware that a simple change in their turnover can require
them to file more tax returns, undergo an audit, or lose tax benefits. For this reason, it is crucial to review net turnover, especially at the end of the fiscal year.
One of the first limits we encounter is that of 100,000 euros, which means that remuneration paid for the position of administrator is subject to a fixed withholding tax of 35%, instead of 19%.
In larger companies, we may encounter the limit of 1 million euros in turnover, losing the exemption from Business Tax.
For larger companies, if the volume of operations during a calendar year exceeds €6,010,121.04, the entity is considered a large company for tax purposes from the following year. This gives rise to the obligation to notify the Tax Agency of this status using Form 036.
In addition, the company must submit monthly self-assessments of withholdings and VAT, and must also comply with the obligations arising from the Immediate Supply of Information. The latter exempts it from submitting Form 347 and the annual VAT summary via Form 390.
Finally, the obligation to submit installment payments must be fulfilled in accordance with the provisions of section 3 of article 40 of the Corporate Income Tax Law, which must be submitted in both cases of profits and losses.
Another important limit is reached when the net turnover exceeds 10 million euros, at which point the company is no longer considered a small business (ERD) and, as a result, certain tax incentives (free depreciation, accelerated depreciation, losses due to impairment of credits for possible debtor insolvency, tax base equalization reserve) no longer apply.
When this limit is exceeded, in addition to the requirements indicated in the previous limit in relation to installment payments, there is a requirement to pay a minimum amount in the case of profits.
We must not forget that in companies with high and sustained business amounts over several financial years, an audit of accounts may be mandatory if, over several financial years, the INCN remains above €5.7 million, together with certain asset and employee requirements.
If your company has exceeded any of these limits, or any higher limits, and you have questions about your obligations, please do not hesitate to contact MDG Advisors, and we will help you resolve your doubts.