According to Ministry of Industry statistics, Spain has nearly three million businesses as of 2024, including self-employed workers. Over one million of these businesses will need to pay corporate income tax, a direct tax on business income that must be paid to the Agencia Tributaria (the Spanish Tax Agency).

The tax amount depends on the company’s profits, so it can be quite high if the business has been very successful during the taxable year. While the corporate income tax (“impuesto sobre sociedades” or IS) declaration is typically submitted using Form 200, the resulting tax must be paid in one lump sum, which can significantly impact the business’s cash flow. For this reason, many companies in Spain opt to divide the tax payment, and in some instances they are required to do so. This article will provide an overview of corporate income tax and offer a detailed explanation of how instalment payments work.

What’s in this article?

• What is corporate income tax?
  
• What are corporate income tax instalment payments?
  
• How are corporate income tax instalment payments calculated?
  
• How are corporate income tax instalment payments processed?
  

What is corporate income tax?

Corporate income tax is a tax that must be declared by all companies registered in Spain, regardless of whether they have made a profit during the relevant tax period.

While we often deal with indirect taxes such as value-added tax (VAT) in our daily lives – where the company adds a percentage to each sale, collects it from customers, and then pays it to the Agencia Tributaria – corporate income tax (IS) is likely the best example of a direct tax. Its calculation is based on the business’s economic results, and the company pays it directly to the Agencia Tributaria (AEAT).

Using tax automation tools such as Stripe Tax can greatly simplify the daily management of your company’s sales taxes. Integrating Tax into your payment system allows you to automatically calculate and collect VAT, sales tax, and goods and services tax in over 50 countries where Tax is available. (See our current list of excluded territories.) Additionally, since Tax regularly updates to reflect the latest tax legislation changes, you can be confident that you’re applying the correct tax rate.

Another key difference between corporate income tax and indirect taxes is that corporate income tax is settled annually using Form 200. For many businesses, paying the full tax amount in one go can be too costly, making instalment payments a popular choice.

What are corporate income tax instalment payments?

Corporate income tax instalments are advance payments businesses can make three times a year to avoid paying the entire corporate income tax due in one lump sum.

When the annual corporate income tax return is filed, the Agencia Tributaria subtracts the advance payments made throughout the year from the total amount due.

How are corporate income tax instalment payments calculated?

To calculate corporate income tax instalment payments, you first need to select one of the two payment methods: 40.2 or 40.3.

The 40.2 method uses the total taxes paid in the previous full year (for which the return has already been filed) as the basis for calculation. In other words, the instalment payments for the current year’s corporate income tax are based on the results of the previous year’s annual tax return.

Alternatively, 40.3 calculates the instalment payments based on the taxable income for the first 3, 9, or 11 months of the calendar year. While businesses can choose between the two methods, Law 27/2014 specifies that a business must use the second method if it meets one of the following conditions:

• If the business had a turnover (without deducting either expenses or operating costs) exceeding €6 million in the year before the tax period
  
• If the business operates under the regime for shipping companies according to tonnage
  

Calculating corporate income tax instalment payments varies based on the chosen method. Let’s see how to calculate it for each method.

Calculating corporate income tax instalment payments using 40.2

To calculate corporate income tax instalment payments using 40.2, the total corporate income tax amount paid by the business in the previous full year is used as the base. Each instalment payment will be 18% of the base.

To better understand how to calculate corporate income tax instalment payments using 40.2, let’s go through an example step by step.

• July 2024: The business files Form 200 and works out that it needs to pay €10,000 in corporate income tax for its 2023 profits.
  
• From 1 October to 20 October 2024: The instalment payment will be €1,800, which is 18% of the €10,000 amount for 2023.
  
• From 1 December to 20 December 2024: The instalment payment will be €1,800, just like the previous one.
  
• 31 December 2024: The business ends the year with profits twice as high as in 2023.
  
• From 1 April to 20 April 2025: Even though it’s now the next year, the instalment payment remains €1,800 because the corporate income tax for 2024 hasn’t been processed yet, so the 18% is still based on the €10,000 from 2023.
  
• July 2025: The company resubmits Form 200 and, due to much better results in 2024, it needs to pay €20,000 corporate income tax.
  
• From 1 October to 20 October 2025: The instalment payment will be €3,600, which is 18% of the 2024 corporate income tax return.
  

Calculating corporate income tax instalment payments using 40.3

Calculating corporate income tax instalments using 40.3 is more complex, but we’ve tried to simplify the steps to make it easier for you.

The corporate income tax instalment payments are based on the taxable income from the first 3, 9, or 11 months of the calendar year. If the tax period doesn’t match the calendar year, you’ll need to make the payment based on the taxable income from the start of the tax period up to 31 March, 30 September, or 30 November, depending on whether it’s the first, second, or third payment period.

The percentages for calculating corporate income tax instalments differ based on whether your business is defined as a small company, with a turnover under €10 million, or a large company (“gran empresa”), with a turnover of €10 million or more.

• Small company: Multiply the tax rate by 5 and divide by 7. Round down the resulting number.
  
• Large company: Multiply the tax rate by 19 and divide by 20. Round up the resulting number.
  

How are corporate income tax instalment payments processed?

No matter if you calculate corporate income tax instalments under 40.2 or 40.3, you make the payment by completing Form 202. This tax form can only be submitted online through the official Agencia Tributaria website. The Agencia Tributaria outlines the process for electronically filing Form 202, which requires either your Cl@ve PIN or digital certificate.

You need to process this tax form between 1 and 20 April for the first payment, between 1 and 20 October for the second, and between 1 and 20 December for the third. If the 20th falls on a Saturday or a non-business day, the deadline will be the next business day.

Dividing a tax often makes the process more complicated. However, using 40.2 simplifies the process by reducing the number of boxes you need to fill out on your return. If you have any questions about instalment payments for corporate income tax, you can consult our guide to Form 202 or speak with your tax advisor about your specific situation.