SMEs’ pandemic losses avoid penalization in autonomous taxation

Micro, small and medium enterprises that have recorded profits in recent years and that, due to the pandemic situation, will report losses in the next two years will escape the increase in autonomous taxation.

The measure is included in the preliminary version of the State Budget for 2021, to which ECO had access, leaving out large companies.

The IRC Code provides for a ten percentage point increase in the autonomous tax rates for companies with losses. However, the government will now introduce a transitional provision in the budget proposal that exempts SMEs and cooperatives that report losses in 2020 and 2021 from this penalization, under the condition that they have made a taxable profit in the last three years and have fulfilled their reporting obligations in the last two years.

On the other hand, also SMEs and cooperatives at the beginning of their business activity or whose tax period corresponds to one of these two periods escape this penalization.

Autonomous taxation applies to certain expenses that are not directly related to the activity of each company, such as vehicle charges (insurance, fuel, maintenance, etc.), daily allowances and representation expenses or, in general, undocumented expenses.