The Net Amount of Turnover (NAT) and the Volume of Operations of a taxpayer can have certain implications on their tax and accounting/mercantile obligations.
Firstly, it’s important to note that while these concepts may coincide on occasions, in other instances, they may differ. This is because NAT is a concept defined by accounting/mercantile regulations, whereas the volume of operations is a fiscal concept defined in Article 121 of Law 37/1992, on Value Added Tax (VAT).
Although, in many instances, fiscal regulations refer to NAT for the regulation of the application of certain taxes.
Without aiming to be exhaustive, the main repercussions of NAT are outlined in both the fiscal and accounting/mercantile spheres:
Corporate Income Tax:
- Tax Rate: Starting from 2023, taxpayers whose NAT for the previous tax period is less than €1 million (and does not qualify as a patrimonial entity) can apply a tax rate of 23%.
- Minimum Taxation: Taxpayers with a NAT of at least €20 million during the 12 months before the start of the tax period will be subject to minimum taxation as mentioned in Article 30.bis of Law 27/2014, on Corporate Income Tax (LIS).
- Installment Payments: Taxpayers with a NAT for the previous tax period exceeding €6 million must calculate their installment payments using the method outlined in Article 40.3 of the LIS.
Additionally, NAT will impact the calculation of its amount and the application of the minimum amount in installment payments.
- BINS Compensation: Depending on the NAT of the previous tax period, the applicable limits are as follows:
NAT less than €20 million: 70%
NAT equal to or greater than €20 million and less than €60 million: 50%
NAT equal to or greater than €60 million: 25%
- Reduced-Size Companies (IERD) Incentives: One of the requirements for application is that the NAT in the immediate preceding tax period is less than €10 million.
- Documentation of transactions between related parties: NAT has an impact on the content and compliance with the obligation to document such transactions.
Tax on Economic Activities (IAE): Taxpayers whose NAT for the tax period, the deadline for submitting Corporate Income Tax (IS) or Non-Resident Income Tax (IRNR) declarations of which ended the previous year to the tax accrual date, is less than €1 million will be exempt.
Accounting/Mercantile Impact: When, among other requirements, a specific NAT is obtained, the following will apply:
- Application of the SMEs General Accounting Plan (PGC PYMES).
- Formulation of Consolidated Annual Accounts (CCAA) in an abbreviated format.
- Obligation to formulate consolidated CCAA.
- Obligation to subject CCAA to audit.
As for the Volume of Operations, it will have implications in the fiscal realm. The main repercussions are detailed below:
- VAT and Withholding Tax Settlement Period: When the volume of operations for the previous year exceeds €6,010,121.04, it will be monthly. Taxpayers must communicate this circumstance through a census declaration.
- Immediate Information Supply (SII): Taxpayers whose settlement period coincides with the natural month, including those whose volume of operations for the previous year exceeds €6,010,121.04, will be obliged to comply with SII.
- Limitation on the application of certain Special VAT Regimes.
- Effects on the determination of differentiated sectors in VAT.
- Effects on the determination of deadlines for the modification of taxable bases due to uncollectible credits in VAT
Furthermore, tax regulations may undergo changes, so it is always advisable to consult with an updated and specialized tax advisor to obtain specific and current information about the situation of a particular company.