Updated: 29/03/21
Law 11/2020, of 30 December, on the General State Budget, establishes the main tax innovations in corporate income tax for 2021. In addition, the new features included in Law 11/2020 refer to:
- Business tax
- Corporate taxation
- Value added tax
- Wealth tax
- Personal income tax
In this case, the analysis focuses on the main novelties introduced in the Corporate Income Tax. These will affect companies in 2021. If you want to know a little more about the other modifications, consult this link to the Tax Agency.
News on corporate income tax
With regard to corporate income tax, there are three significant aspects to bear in mind. The limitation on the deductibility of financial expenses. The exemption on dividends and income derived from the transfer of securities representing funds in resident and non-resident entities. And finally, the international double taxation of dividends and shares in profits.
Firstly, Article 16 deals with the limitation on the deductibility of financial expenses. As an amendment, the holding of more than 20 million is deleted and the requirement of a holding of at least 5% in equity instruments of entities remains.
Secondly, Article 21 details the novelty of the double taxation exemption, accompanied by two amendments. On the one hand, the elimination of the alternative requirement that the acquisition value of the shareholding be greater than 20 million euros. On the other hand, for the calculation of the gross tax liability, it is added that dividends or shares in profits will be reduced by 5% in respect of management expenses relating to such shares. Therefore, the exempt amount will be 95% of said dividend or income.
Finally, Article 32 provides for a deduction for the avoidance of international economic double taxation. The alternative requirement for the acquisition value of the holding to exceed €20 million is removed.
Other key aspects of corporate income tax to bear in mind
As an additional note to the main new features of Corporate Income Tax, we should consider that dividends or shares in profits will be reduced by 5% as management expenses relating to these shares when calculating the full tax liability. Likewise, the amounts that must be included in the individual taxable bases by application of the provisions of section 10 of the article of this Law will not be eliminated.
If you have any doubts about any new aspect of the Corporate Tax established in this Law 11/2020, we invite you to contact us. Our expert advisors in tax matters will help you and resolve all your doubts.
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