COVID-19: A New Deadline for the Payment of Corporate Income Tax?

Published on 29 April 2020

After the entry into force of the state of alarm, and until its end, the deadline to prepare the annual accounts is suspended. In addition, after the state of alarm is lifted (foreseen for the month of May), companies will have a “new term of three months” in which to prepare them. To this we must add that the shareholders generally have another, additional period of three months to approve the accounts.

Given that in practice the most common case for the majority of Spanish entities, which close their financial year at 31 December 2019, is that preparation of the annual accounts does not take place until August, and the approval by the general shareholders’ meeting could be delayed until November of 2020; all of this is provided that the forecast of the end of the state of alarm being in May proves true.

However, entities would have until 25 July to submit and pay corporate income tax. As we all know, said tax is calculated using the “accounting profit/loss,” and the paradox would arise that such number would not yet have been prepared by the directors, much less approved by the shareholders’ meeting.

This temporal incoherence may lead the director of a company to declare an accounting profit/loss to the tax authorities which is not subsequently approved or which undergoes significant modifications in an audit. It is obvious: this situation would provoke undesirable consequences and serious liabilities both for the entity and for the director himself.

We would like this obvious contradiction to be taken into consideration by the government, and for the proper legal measures be taken so as not to cause more damage to Spanish companies.