Business taxation for groups from 2022 onwards
The new regulation means that companies that form part of a group must compute the total turnover of the group, regardless of whether they are obliged to present consolidated annual accounts.
Entities whose turnover is less than one million euros are exempt from taxation under the Business Activity Tax (IAE).
This general rule, in the case of companies that form part of a commercial group, was also applied in the case that the group did not have to present consolidated annual accounts, in which case, to determine the right to exemption, only the turnover of each of the companies individually was taken into account.
With effect from 11 July 2021, Law 11/2021, of 9 July, on measures to prevent and combat tax fraud, amended Article 82.1.c) of the Law Regulating Local Treasuries, clarifying that the net turnover must refer to groups of companies “regardless of the obligation of accounting consolidation“, i.e., even if the group does not prepare consolidated annual accounts.
In accordance with this new regulation for determining tax exemption, the turnover to be considered will be that referring to all the entities belonging to the commercial group, so that all the entities must pay tax if the total turnover is equal to or greater than one million euros. It should be remembered that the net turnover to be computed must be that of the tax period for which the corporate income tax filing period ended in the year prior to the accrual of business tax (1 January).
Thus, for the IAE of 2022, the corporate income tax return filed during the 2021 tax year must be taken into account, which for entities whose tax year coincides with the calendar year will be the one corresponding to 2020.
Given that IAE registrations due to ceasing to enjoy exemption must be filed during December and variations during January, we recommend reviewing the Business Activity Tax situation of all entities, but especially that of groups of companies due to the modification explained above, which will entail the obligation to pay tax for companies belonging to groups which, until 2021, were exempt.
