Spanish corporate income tax filing deadlines in the COVID-19 context

On 26 May, Spanish Parliament enacted Royal Decree 19/2020, approving additional measures in several areas destined to ease the effects of COVID-19. As regards taxation, the main measure relates to the filing of the Corporate Income Tax return in relation to year 2019.

It is worth noting that such Royal Decree 19/2020 also extended the term (to four months instead of three) where no interest payments would be claimed due for extension to tax payment deadlines granted by articles 14 of Royal Decree 7/2020 and 52 of Royal Decree 11/2020.

For the purposes of the current article, however, Royal Decree 19/2020 finally addresses the issue of the Corporate Income Tax filing. Thus, article 40 of Royal Decree 8/2020, dated 17 March, on extraordinary and urgent measures to confront the social and economic effects of COVID-19 provided exceptional rules for the deadlines to draw-up, verify and approve the annual accounts of companies and other private legal persons (excluding listed companies, which were subject to separate regulations). In broad terms, the original term of three months from the conclusion of the corporate year was suspended until 1 June. On such date, a new three-month term was granted to draw-up the annual accounts. Additionally, a General Shareholders Meeting should be held to approve the annual accounts within two months from the conclusion of the term to draw-up such annual accounts. In this manner, the term to approve annual accounts has been extended until November.

Such extension of the terms within which to draw-up and approve annual accounts impacts the corporate income tax filing, since the tax base is determined in accordance with the accounting result of the corresponding year. There could thus be a case whereby a company would not have drawn-up its annual accounts and would be obliged to file its corporate income tax return.
In this context, Spanish Parliament has opted for maintaining the corporate income tax filing deadline, which will continue to be within the 25 calendar days subsequent to the six months after the conclusion of the tax year. In other words, those taxpayers with a tax year consistent with the calendar year should file up until 25 July. However, taxpayers, who have not drawn up their annual accounts on such date, are allowed to make such filing on the basis of the accounting information at their disposal on such date.

Therefore, taxpayers should file their corporate income tax return on the basis of the following information:

• Firstly, in accordance with the annual accounts approved by the corresponding corporate body;
• Where approved annual accounts are not available, on the basis of the annual accounts drawn-up by the directors; or
• Failing drawn-up accounts, with the accounting information available consistent with the Spanish Commercial Code and accounting rules and regulations.

Should the subsequent approval of annual accounts give rise to differences as compared with the accounting information used for the corporate income tax return and should such differences have an impact on the return, the taxpayer may file an additional return.

However, such "second return" will have the following specialties:

• The filing deadline for such return will be until 30 November 2020.
• Should the second return result in an additional amount due, the taxpayer will not be liable for late filing surcharges, applicable under the Spanish General Tax Act, although late interest will be due as from the conclusion of the deadline for the first filing (as a general rule, 25 July).
• Should the second return give rise to a refund, the taxpayer would be entitled to late payment interest:
  - Calculated as a general rule from 6 months after 30 November.
  - But, should the refund be due to an excessive payment in the "first return", interest will be due from the conclusion of the filing period for this first return.
• The limitations to the exercise of options which the taxpayer may elect, apply for or renounce will not apply (such options are provided for under article 119.3 of Law 58/2003, approving the General Tax Act).

As a summary, Spanish Parliament has not extended the term during which to file the corporate income tax return (contrary to petitions from various sectors). Instead, Parliament provides the possibility to make an initial filing on the basis of temporary accounting information and such filing may be corrected until 30 November, without late filing surcharge liability, although late interest may be due.