The year-end turnover figure can affect your tax position across several taxes in 2025

The turnover figure at the end of the financial year is not just an accounting indicator. It directly affects the applicable tax regimes, tax rates, compliance obligations and the level of scrutiny by the Spanish Tax Agency. An unplanned year-end close can result in higher taxes and increased tax risk in 2025.

Turnover is not only a measure of business performance. From a tax perspective, it acts as a threshold criterion that determines whether specific tax regimes, incentives and formal obligations apply.

For the Spanish Tax Agency, turnover is used to:

• Classify companies by size.

• Define the level of tax monitoring and control.

• Apply more stringent tax rules in specific areas.

A one-off increase or an incorrect allocation of income at year’s end can move your company into a less favourable tax bracket with real consequences.

Turnover directly affects key aspects of Corporate Income Tax:

• Eligibility for reduced tax rates applicable to small and medium-sized entities.

• Access to specific tax incentives.

• Limitations on the offsetting of tax losses.

• Special rules on depreciation and provisions.

Exceeding certain thresholds may result in the loss of tax benefits previously applied in prior years.

In the area of VAT, turnover may determine:

• Inclusion in or exclusion from specific VAT regimes.

• The obligation to comply with the Immediate Supply of Information system.

• Additional reporting and compliance requirements.

Crossing a turnover threshold often increases the administrative burden from the start of the following year.

Turnover can also affect:

• Certain periodic reporting obligations.

• Calculation rules for recurring transactions.

• Additional formal requirements in dealings with third parties.

Beyond the direct tax impact, turnover influences other relevant areas:

• A higher likelihood of tax audits or reviews.

• Increased documentation requirements for related-party transactions.

• Stricter materiality thresholds.

• More intensive review of deductions and expenses.

These effects may not be immediate, but they usually become evident during the following financial year.

At year’s end, it is common for companies to make mistakes that go unnoticed but have a direct tax impact:

• Incorrect allocation of income at the end of the year that distorts the real turnover figure.

• Failure to review extraordinary or non-recurring transactions.

• Closing the year without prior tax simulations.

• Misalignment between accounting criteria and tax rules.

• Artificial increases in turnover that place the company in a less favourable tax bracket without economic justification.

Identifying these issues before closing the accounts allows corrective action to be taken in time.

Proper year-end tax planning allows you to:

• Assess tax consequences before recording specific transactions.

• Decide the appropriate timing for invoicing certain operations.

• Review accounting criteria in line with tax regulations.

• Avoid unnecessary threshold jumps due to lack of analysis.

This is not about deferring taxes artificially, but about structuring the year-end close correctly within the legal framework.

What to review before closing the year

Before 31 December, you should carry out a structured review of the following points:

• Accumulated turnover and the projected figure at year’s end.

• Extraordinary transactions carried out in the last quarter and their correct accounting treatment.

• Outstanding invoices and applied accrual criteria.

• The impact of turnover on Corporate Income Tax and VAT.

• Additional tax obligations that may arise in 2025 as a result of exceeding specific thresholds.

• Consistency between accounting records, tax treatment and supporting documentation.

An early review allows you to make informed decisions and close the year with greater tax certainty.

Turnover is a strategic figure, not merely an accounting one. Closing the year without analysing its tax implications can result in higher taxes, increased compliance obligations and greater exposure to tax reviews in the following year. Anticipation and proper planning are essential to protect your tax position.