Are inactive companies required to submit the Company Tax declaration?

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Ahead of the upcoming Company Tax declaration of the 2016 financial year, we wish to remind you that all payers of it are required to submit the Company Tax declaration, regardless of whether or not they have carried out activities during the taxation period, or whether or not they have obtained income that is subject to the tax.


Consequently, circumstances such as if the company remains inactive or, if its activity has not resulted in income that is subject to taxation does not exempt the tax payer from the obligation to submit the required declaration.


Who is subject to the Company Tax?


Being subject to the Tax is determined by residency in Spanish territory. Companies that meet one of the following requirements will be considered residents in Spanish territory:

  • Those that were established in compliance with Spanish laws.
  • Those that have their business address in Spanish territory.
  • Those that have their centre of effective management in Spanish territory.


Remember that the Tax Authority may consider that a company based in a country or territory where there is no taxation or that is a tax paradise, is based in Spanish territory when its main assets, either directly or indirectly, consist of assets located or rights that are fulfilled or exercised on Spanish territory, or when their main activity is carried out on it, unless that entity shows that its address and effective management take place in that country or territory, as well as that the establishment and operations of the entity correspond to valid economic motives and significant business reasons other than the simple management of equity or other assets.


Tax payers of the Company Tax will be taxed for all of the income they obtain, regardless of where they earned it and where the payer resides.


As the sole exceptions from the general obligation to declare, the current legislation includes the entities that are declared to be totally exempted by article 9.1 of Company Tax Law (the State, Autonomous Communities, Social Security Management Bodies…) and the partially exempt entities that are referred to in article 9.3 of the same law (not for profit entities; unions, federations and confederations of cooperatives; professional associations, business associations etc…) that comply with the following requirements:

  • That the total income does not surpass 75,000 euros per year.
  • That the incoming corresponding to non-exempt revenue does not surpass 2,000 euros per year.
  • That all the non-exempt revenue obtained is subject to withholding.

And, lastly, joint-owners of commonly-owned mountain land, in relation to tax periods where they do not have incomes subject to Company Tax, or incur any expenses, or make investments that provide the right to a reduction in the taxable base that is specifically applicable to those tax payers.


Civil Societies


From 2016 on, civil societies with a legal personality and business purpose, that has been paying taxes via the income allocation system, will become payers of the Company Tax, However, civil societies that carry out activities relating to farming, livestock, forestry, fishing, mining, as well as professionals in the sense of Law 2/2007 on Professional Companies will continue to pay via personal income tax (IRPF).


If you set up a civil society some time ago that is now inactive, ensure that it was dissolved and liquidated. You should not forget that since 2016 companies with a legal personality and business purpose are payers of Company Tax, and that makes it necessary for them to submit the declaration for that tax each year (even when the company is inactive). Otherwise, the Tax Authority may punish you with a fine of up to 200 euros for each declaration not submitted.


Attention. If you are the administrator of an inactive company and stop submitting declarations, the Tax Authority can impose sanctions. Also, if you do not have the money to pay, the Tax Authority can begin a procedure to establish liability and demand the payments from you as the administrator.


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Claiming generated costs relating to mortgage from banks

This month we thought it was necessary to direct this article at everyone that has drawn up a mortgage agreement, as we have received a barrage of inquiries following the publication in the media of the recent ruling of the Supreme Court. It declares the clause outlined in the majority of mortgage deeds whereby the client pays the costs for the execution of the deed, preparatory work and judicial costs, to be abusive.

Up until now, banks had charged the client all of the costs that were generated as a result of executing the mortgage deed, its registration and taxes (or even subsequent costs and legal fees). However, with this clause now declared to be abusive by the Supreme Court, the banks will have to refund these costs.

With regard to the drawing up of notary deeds and their registration (necessary for the creation of the security right), with the fee of notaries, as well as that of property registers, the obligation to pay is attributed to the party requesting the service or in whose favour the right is registered or who is requesting a certificate. In this case, it is the bank that has the main interest in the documentation and registry of the mortgage loan deeds, as it thus creates the security right and requires the possibility of special execution. Therefore, this is a stipulation that causes the client imbalance for the client, that would not have been reasonably accepted within the framework of a personalised negotiation; and that also, appears explicitly outlined in the catalogue of clauses that the law classifies as abusive.

Likewise, the lending institution does not escape the taxes that may be yielded as a result of the trade operation, but rather, at least in relation to the tax on documented legal acts, it shall be a taxable entity in relation to the constitution of the right and, in any case, the issuance of relevant copies, documents and evidence which, through the disputed clause, that is unduly burdened on the other contracting party. In virtue of the fact that it contravenes regulations that in certain aspects of a mandatory nature, as well as because it infringes article 89.3 c) Recast Text of the General Law for the Defence of Consumers and Users, which deems the stipulation forcing the consumer to pay taxes on which the company is the taxable entity, the declaration of invalidity is fully adjusted to law.

People with the right to claim these costs are everyone that has a current mortgage or that have made payments no more than four years ago. The steps to follow involve first going to the customer ombudsman and then to the legal authorities. There is a period of four years for making claims starting from the September 2015 ruling, that is to say, the deadline is 24 December 2019. For those that have paid off the mortgage, they can claim if the total payment was made four years before the ruling, that is to say, from the 23 September on. It only affects consumers, not companies, and it affects mortgages on primary residences as well as second or third residences.

Although you can never think that it is easy to win claims and less so against banks, which have sufficient resources to appeal everything that goes against them, the fact that banks such as

Santander, BBVA, CaixaBank, Bankia, Sabadell and Ibercaja have modified their clauses after the Supreme Court ruling shows they are aware the clauses were not established well. Despite everything, there are claims in favour of clients, but also other against them. There have still not been a lot of rulings, therefore it is too early to say if clients are going to win en masse.

At Contasult we are available to study your specific case. It is necessary that you provide us with: mortgage deed, subsequent extensions or novations, mortgage payment receipts (only if it is current), invoice from the processing agency, invoice from the notary and corresponding Property Registry, payment slip for the Tax on Legal Documents, census certificate (if the mortgaged property is your main residence) and mortgage cancellation deed (if it was cancelled and had that document).