Corporation tax 2015. Advantageous changes for companies

February 2015.- The Corporation Tax Law 27/2014 introduces significant developments that benefit companies and affect their tax rates, specifically the tax base, deductions and amortizations, etc.

Reduction in Corporation Tax

The general corporate tax rates decreases from 30% to 25%. Temporarily in 2015, the rate will be 28%. With this measure, this tax will be established at average Euro zone rates, which in 2014 has been at 25.3%.

Deduction on capitalisation of reserves

Those profits aimed at constituting a restricted reserve will be tax exempt. Specifically, all companies will enjoy a reduction in the taxable base of 10% of the increase of their equity, as long as they meet the following requirements:

  • The increase of the equity is maintained for 5 years, except in the case of losses.
  • The company must establish a 5-year restricted reserve representing the amount of the reduction.

With this new deduction, aimed at boosting the capitalisation for companies, the effective tax rate will be 22.5% (25%-2.5%).

Deduction for reserves of tax bases

Small-sized entities (with a turnover under 10M€) can reduce their positive tax base up to 10% of its value so that their tax base can be 22.5% (25%-2.5%). This 10% discount is not definitive given that it is dependent on having fiscal losses in any of the five following years. If this does no occur, the company will need to return the discounted amount. This mechanism represents an advance of compensation of negative tax bases, performed before tax losses occur.

Deduction of technological innovation activity – Animation and videogames

Costs of development of videogames or audio-visual material will be consider to be technological innovation and therefore deductible in corporation tax at 12%. So, with this Tax Reform, companies that develop videogames or audio-visual material, such as films or cartoon series, can deduct the expenses related to de design and development of their prototypes or pilots.

New premise for freedom of amortization

A new premise for freedom of amortization is established for new tangible assets, whose unit acquisition value does not exceed 300€, up to a limit of 25,000€.

Elimination of the time limit for loss compensation

Until the financial year 2014, companies had a period of 18 years in which to compensate negative tax bases of previous years. In 2015, this limit is removed.

Marc Duran
Head of Incentives Advisory Unit
Invest in Catalonia

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