Is it worth paying Corporation Tax early?

Is it worth paying Corporation Tax early?

Inactive companies tax obligations colombia

In the case of Corporate Income Tax, a new law was passed, Law 27/2014, which came into force, in general, on January 1, 2015, affecting the tax periods 2015 and following.

Shareholders’ equity is the equity (non-refundable) of a company, formed by the contributions of the shareholders to its capital stock and the undistributed profits. It is part of the non-callable liabilities.

This tax benefit is applicable, among others, to the following entities: those subject to the general tax rate[3], small and medium-sized companies (SMEs), property entities (without economic activity, for example, engaged in renting), and newly created entities[4] (in the second year of their creation, in the first year the increase in equity is always nil).

In order to calculate the increase in equity, the result of the fiscal year itself is not taken into account, so that the amount of the reduction is not affected by whether the result of the fiscal year has been positive or negative, whether it has been destined to the distribution of dividends[5], etc.

Closure of a company due to inactivity

A dormant company is a company that does not exercise any economic activity. It communicates its cancellation of its activity to the tax authorities and remains in a kind of lethargy waiting to be reactivated or liquidated.

In most cases, the company is left inactive or “dormant” in case the same or another activity can be reactivated in the future. This avoids the costs of dissolution and incorporation of a new entity. It also avoids the feeling of failure that can result from closing a company in which so many efforts and illusions were put.

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And it is easier to leave a company inactive than to liquidate it. Dissolving and liquidating a company is not free. It happens as in the burials, the costs shoot up.    It is necessary to carry out a multitude of formalities:

Then it must be communicated to the Treasury, presenting a modification in the census declaration of the model 036. It is necessary to mark the box 140 “To stop exercising all the managerial and/or professional activities (legal persons and entities without dissolution. Inactive entities)” Also the box 141 “Effective date of the cessation” will be filled in.

Corporate income tax in spain

Given that personal income tax is taxed progressively and personal and family circumstances are taken into consideration, we must determine from what interval taxation in corporate income tax is possible. The personal income tax rates are as follows depending on the taxable income:

However, the withdrawal of money from a company is taxed as a dividend in the income tax return at 18% (19% from 6,000 euros) and to finish squaring the circle, the company must pay us a salary as administrators within the work of direction and management of the company.

To constitute a society has some expenses, approximately 700 euros and requires at the same time greater documentary and formal obligations. If we are not very well versed in fiscal matters, we must entrust the tasks of management of the company to a good adviser. Therefore, as a general rule, at the level of advisors, the limit of fiscal balance is fixed at 50,000 euros of taxable base in the IRPF. If in our income tax return the taxable base is higher than 50,000 euros, it is interesting to incorporate a company, for lower figures it is not worth it.

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Inactive company for 20 years

One of the main problems for companies is to reduce their corporate income tax. Is it possible to achieve this? Yes. It is possible, but it is necessary to know the deductions and the fiscal benefits to which the companies are entitled in 2021.

The Treasury calculates that this exemption reduction alone will affect 0.12% of the 1.5 million registered companies. These are the 1,739 largest firms in the country, which are expected to contribute an additional 1,520 million.

The purpose of this reduction is that in the year in which profits are obtained, part of them will not be taxed, since it is expected that in the coming years negative tax bases will be obtained which will offset the current positive ones.

In addition, companies with less than 50 employees will be able to deduct from the gross tax liability 50% of the lesser of the following amounts, provided that they enter into an employment contract for an indefinite period of time to support entrepreneurs.

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