Direct Taxes

Company Tax (SZ) (2017 Campaign)

Type of Tax Direct
Collected by Provincial Government
Paid by Corporate entities
Tax base The annual profits, i.e. the result of subtracting any expenses from the income
Abatements in the base There are different abatements for small and medium-sized enterprises. For more information click here
Net tax base Calculated by subtracting the corresponding abatements from the tax base
Tariff or Rate Generally, 28%; for small enterprises, 24%. For more information click here
Liability Calculated by applying the tax rate to the net tax base
Deductions Among others, those resulting from promotion of R&D (Research and Development)
Amount payable Calculated by subtracting the corresponding deductions from the tax liability

Company Tax is a direct personal tax. in the Basque Autonomous Community, in accordance with the Economic Accord, the provincial governments are responsible for collecting this tax; i.e., the Provincial Governments of Araba, Bizkaia and Gipuzkoa.

What is this tax levied on?

Company Tax is levied on the income, i.e. the profits obtained by the taxable parties. This tax is paid by commercial corporations on the profits obtained, and is calculated on the basis of those profits.

How is the amount payable calculated?

  1. Tax base: the profits obtained during the period for which the tax is calculated; it therefore takes into account both the economic profits obtained by the company and the results of any increase or reduction in equity.

    Profits are calculated as follows: Any expenses are subtracted from any monetary income. And the increase or reduction in equity is calculated as follows: from the income obtained from the sale of the equity the total used in the purchase of said equity is subtracted.

  2. Abatements in the base: among other possibilities, small companies can write off their investments in new tangible assets against profits, thus reducing the tax base. They can also deduct provisions for possible insolvency by debtors. For more information clic here
  3. 3. Net tax base: calculated by subtracting the corresponding abatements from the tax base.
  4. 4. Tariff or Rate: percentage to be applied to the net tax base. In general, it is 28%; however, if the taxable party is a small company, the rate is 24%. Depending on the type of company, the corresponding rate may vary. For more information click here. clic here
  5. 5. Liability: calculated by applying the corresponding tax rate to the net tax base.
  6. 6. Deductions. the deductions set out in Header V, Chapter II and Chapter III, of Provision of Customary Law 2/2014, of 17 January 2014 (Company Tax Law) apply.
  7. 7. Amount payable: calculated by subtracting the corresponding deductions from the tax liability.

Example

Zurlan, a company located in Eibar, has a workforce of 60. The company had the following income and expenses:

  • purchase of products: €115,000
  • sale of products: €308,000
  • wages and payroll: €122,000
  • sale of a premises: €25,000 (when purchased, the premises cost €19,000)

Does it have to pay Company Tax? How much? What is this company's net profit?

Firstly, we need to analyse whether the company has had any profits. To do this, we calculate the difference between income and expenses. In this case:

  • Income: €314,000 (308,000 + 6,000)
  • Expenses: €237,000 (115,000 + 122,000)
  • Gross profit: €77,000 (314,000 - 237,000)
  • Given that it has no applicable abatements, we look up the tax rate corresponding to this company. In this case, the rate to be applied is 28%
  • Liability: €21,560 (28% of €77,000)
  • • Company Tax to be paid: €21,560
  • • Net profit: €55,440 (77,000 - 21,560)

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