The Tax on the Increase in Value of Urban Land, better known as “municipal capital gains tax”, is a conflictive tax that is levied on the increase in value of urban land -whether or not there is construction- as well as real estate with special characteristics -BICE- as a result
WHAT IS THE IAE and how is it calculated?
The Tax on Economic Activities is a municipal tax, compulsory and census-based, which is levied on the mere exercise, in national territory, of any economic activity, carried out by individuals, legal entities and entities whose net turnover exceeds 1,000,000 euros.
This tax is managed jointly by the General State Administration and the local administrations. The former is responsible for census management, which includes the preparation of the census register and the classification of activities, among other responsibilities, while the local councils and Autonomous Regions are responsible for tax management, which basically includes the preparation of tax assessments, collection and the granting or denial of rebates and exemptions.
IAE quota rates (municipal, provincial and national)
This tax has three types of quota established by municipal, provincial and national regulations. In certain cases, it is possible to choose the one that is most convenient for the taxpayer. The main types of quota are the following:
- Minimum municipal quotas: This quota allows the exercise of the activities in the municipal district. In the event that several activities are carried out in the same premises, as many minimum municipal quotas can be paid as activities are carried out.
- Provincial fees: This type of fee allows activities to be carried out within the territorial scope of the province in question.
- National quotas: In this case, this quota allows activities to be carried out throughout the national territory. In the event that the activity in question has more than one type of quota, the company may choose to pay the one that is of most interest to it.
What is the provincial surcharge?
This is a surcharge that can be established by the provincial councils on the Economic Activities Tax. It is voluntary and is levied on taxpayers liable for IAE. It should also be noted that it is only payable in cases of application of municipal quotas, in addition to not being able to exceed 40% in any case.
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How does Euro-Funding help you to calculate the IAE?
We help companies with the correct declaration of the Economic Activities Tax and its updating if certain variations of the tax elements are exceeded through the calculation of the IAE.
- Diagnosis: Compilation and study of documentation.
- Study: Analysis of tax elements and possible field work.
- Report: Presentation of results: possible savings or contingencies detected.
- Processing: Submission of declaration and rectification letter.
- Application: For refund of undue income (if applicable).
- Follow-up: Of files requesting retroactive effects.
Support in inspections of the Economic Activities Tax (Impuesto de Actividades Económicas)
The Business Tax is a complex and interpretative tax, so that in the event of an inspection, specialised advice is essential.
Possible causes of an inspection:
- Out-of-date tax elements (calculation of surface areas, taxable power…).
- Incorrect classification of the activities carried out.
- Failure to register under secondary activity headings.
Consequences of an inspection:
- Penalty of between 50% and 100% of the tax not paid (art. 192 LGT).
- Liquidation of late payment interest.
- Internal cost of attending to the inspection.
- Settlement of undeclared quotas in the last 4 years.
Advantages of calculating the IAE with an expert company
The correct determination of the IAE tax liability requires training and technical experience that allows for knowledge of the specialities of IAE taxation depending on each sector.
Incorrect calculation of IAE and how it negatively affects
We can highlight two main situations in the erroneous calculation of Business Tax:
- Tax elements are declared in a higher amount than the legally required amount, the company is paying an annual excess tax. And, following the proposed adjustment, the annual tax bill will be reduced. In addition to requesting the rectification with retroactive effect in order to obtain a refund of the excess paid in the non-prescribed years.
- The tax elements that really affect the economic activity are higher than those declared, and the company is at risk of being subject to an inspection procedure by the Administration, with the consequent liquidations of the non-prescribed years and sanctions.
IAE tax rebates 2023
The local councils can establish a series of tax benefits of an optional and requested nature, which, if they meet the established requirements, must be applied for in a timely manner:
- A rebate of up to 50% of the corresponding IAE quota for job creation: this will be applied in the IAE of 2023 when there has been an increase in the average number of workers with an indefinite-term contract during 2022, taking into account the contracts entered into in comparison with those existing in 2021. These are optional rebates for local councils, the application of which must be set out in the respective Tax Ordinance.
- A rebate of up to 50% of the IAE quota for taxpayers who pay municipal taxes and carry out certain actions that respect or favour the environment.
- The net yield of the economic activity will be negative or less than the amount determined by the tax ordinance. Net income from corporate income tax shall be understood to be the taxable base of this tax for the last financial year presented, without including for these purposes the compensation of negative taxable bases from previous periods or profits or losses from non-current assets.
We develop a continuous institutional work collaborating with different state and autonomic organisms, economic agents, sectorial associations, business schools and Technological Centres.
At Euro-Funding we have developed our own Integrated Management System consisting of: ISO 9.001 Quality, ISO 14.001 Environmental, ISO 50.001 Energy Management and Information Security Management 27.001.
We are subscribed to the United Nations Global Compact in the areas of human rights, labour, environmental protection and anti-corruption, complying with the ten Principles of the Compact, as established in its Code of Ethical Conduct.
We have calculated and registered our Carbon Footprint in the Registry of the current Ministry for Ecological Transition and Demographic Challenge since 2014, maintaining a constant reduction of emissions.
Integrated management/ 360° : Support throughout the process
Our professionalism offers us a wide variety of casuistry in the fiscal treatment of companies studied, having achieved numerous cases of success in the verification and updating of the parameters that make up the Economic Activities Tax for its correct determination.
We have a multidisciplinary team of architects, engineers, lawyers and economists from different competent bodies and other private sectors, distributed among our offices in A Coruña, Barcelona, Bilbao, Madrid, Seville and Valencia.
Other services related
The tax benefits applicable to ICIO may be established: In regulations with the status of law, such as, for example, those that may provide for tax benefits in the General State Budget Laws. In international treaties. In tax byelaws. Ampliar información Property Tax Tax on construction installations and works Business
Review of the tax from the point of view of cadastral and tax management, previously quantifying by providing a valuation report to our clients, the estimated savings that they will obtain in the next IBI bill as well as the Refund of Undue Income of all years not prescribed, if