Large companies have such an impact on a country’s economy and tax collection that tax authorities around the world have developed a specific definition based on the requirements of what is considered a large company for tax purposes. Do you want to know more about large companies? GyV will tell you all about it!

How do you define a “large company”?

In general terms, a “large company” is defined as an entity that has a significant amount of income and assets. The tax authorities use this definition to determine the amount of tax to be paid and how tax returns should be filed.
However, the exact definition of what is considered a large company varies from country to country. In some places, a company may be defined as “large” based on the number of employees that it has, while in other places, the size of a company is measured by its revenue or assets.

What is considered a “large company” in Spain?

In Spain, a large company for tax purposes is defined as a company whose turnover exceeds EUR 6,010,121.04 per year. This definition applies to both individual companies and business groups.
In addition, there is a number of other criteria that can be considered when determining whether a company is a large company for tax purposes. These criteria include the number of employees it has, the value added generated, and the level of assets.

Is it mandatory to notify the Tax Agency as a company’s status as a “large company”?

Yes, it is. All companies that have done transactions of over 6 million euros must inform the Tax Agency that they have acquired the status of a “Large Company” by means of the 036 Form, which is a census declaration. This document must state that they have obtained the new status of a “Large Company” and the date on which this occurred.
The deadline for submitting this notification is between January 1st and February 20th. If the census declaration is made after the stipulated deadline, it could lead to a penalty of €200.
If, when acquiring the status of “Large Company”, the organisation ceases to meet the requirements to be considered as such, then it must notify the Tax Agency of this loss of status in the same way and within the same period as mentioned above.

What are the tax obligations of large companies in Spain?

Companies considered “large” for tax purposes in Spain have more complex tax and accounting obligations than smaller companies. For example, they are required to file specific information returns, such as Form 232, which details information about related party transactions and other relevant transactions.
In addition, these companies are subject to a corporate income tax rate of up to 30%, 5% higher than SMEs which are taxed at a rate of 25%. Although this is on paper, the reality is that the average effective rate paid by large companies is around 16%-17%.

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