Startup taxation

Creating a company entails many obligations, with your partners if you have them, with your workers if you hire personnel, with Social Security and the Treasury. In this post, we will focus on the taxation of a startup so that you know what tax obligations you are going to have and how to comply with those obligations.

Basic aspects of the taxation of a startup

We start from the fact that the startup is in the form of a company (generally a limited company), so we must know the most important taxes that will have to be paid, which are the following:

• VAT. A quarterly return must be submitted in January, April, July and October (Form 303). In addition, an annual summary is presented in January (Form 390).
• Personal Income Tax. You will have to pay for several concepts:
  • For the professionals that you hire and who include withholdings in their invoices (lawyers, consultants, etc.) and for the withholdings in the workers’ payroll. A quarterly return is filed with form 111 and an annual one with Form 190.
  • For the withholdings made to the lessors, in the case in which the company has a rented premise or office. A quarterly return is filed with Form 115 and an annual one with Form 180.
  • For the withholdings of movable capital, Form 123 is presented quarterly and 193 annually.
• Corporation Tax (IS). It is paid based on the profit obtained by the company. The general rate is 25%, but there is a reduced rate for newly created companies of 15%.
• Operations with third parties. It is the 347 model that is presented in cases in which operations are carried out with operators that exceed 3,005.06 euros per year.
• Intra-community operations. They are declared through form 349 and refers to deliveries and acquisitions made within the European Community.

Top exemptions and deductions

The taxation of a startup is also marked by a series of exemptions and deductions, among which the following stand out:

• Deduction for investment in newly or recently created companies. To apply this deduction, a series of requirements must be applied:
  • The shares or participation must be acquired in incorporating the company or in a capital increase in the following 3 years.
  • The investment must remain in the buyer’s equity for between 3 and 12 years.
  • The percentage of participation of the company cannot be more than 40%.
  • The activity of the company must be new.
• Deduction for R + D + i activities. It is used to encourage technological innovation in companies, which contributes to creating jobs and improving competitiveness.
• Exemption for reinvestment in shares or participations of another startup. In this case, capital gains derived from the transfer of shares or participation of newly created companies are exempt from personal income tax. The exemption can be total if the total amount achieved with the transfer is reinvested or partial, in the case in which a part is reinvested.

Knowing in-depth the taxation of a startup will help you avoid making mistakes that involve having to pay a surcharge or a penalty, which may affect the liquidity of your business.