Spanish Tax Businesses - Estimacion Directa Modulos

Businesses subject to Estimacion Directa Por Modulos in Spain

Estimacion Directa por Modulos is a method whereby Hacienda estimate your profits subject to certain criteria.

The profits estimated have nothing to do with the real profit. For example 2 bars with 100m2, with the same bar length, and same number of tables pay Hacienda the same amount of tax, even though one bar is empty and the other is always full of people.

Hacienda offers this tax method so that smaller businesses don't have worry about accounting, or working out their taxes, in exchange this businesses pay a higher rate of tax.

Under modulos you will normally pay more in taxes than you would otherwise. There is however another side. If according to your modulo you earn 150,000€ but in reality earn 1,000,000€ you only pay for the 150,000€ estimated by Hacienda, the rest is yours.

Be aware however that not every type of business can declare under Estimacion Directa por Modulos.

This article is for information purposes only

Spanish Tax Businesses - Estimacion Directa Simplificada

Who does Estimacion Directa Simplificada apply to?

This form of tax Spanish assesment is applicable under the following circumstances:

• The business activities are not subject to Estimacion Directa Objetiva under Spanish law.
• The previous years total business activity income does not supercede 600,00€
• The contributor has not renounced the option of Estimacion Directa Simplificada.
• There is no business activity which would oblige the contributor to be assesed under Estimacion Directa Normal or Estimacion de Regimen Normal.

Calculating Net Profit

In Spain the net profit will be calculated using the income minus expenses principle based on Estimacion Directa Normal with the following exceptions.

• Writting off of equipment will be calculated in a linear mode in accordance with the tables and guidelines for this method of assesment (Orden de 27 de marzo de 1998).
• Expenses that are difficult to quantify will be subject to 5% positive net profit from their use.

Accounting Requirements

• Self employed in Spain: Must maintain the following books. Sales and income ledger. Purchase and expenses ledger. Investment ledger.
• Professionals working in Spain: Income ledger. Expenses ledger. Fund provision ledger.

Quaterly Payments

Contributers assesed on Estimacion Directa Normal have to make quaterly payments on account of IRPF (income tax) on the following dates. On the first thre quarters between the 1st and 20th of April, July and October. the last quarter is paid between the 1st and 30th of January of the follwing year.Each quaterly payment will be calculated using the following formula. 20% of the net profit achieved from the begining of the quarter up to the last date of the quarter being assesed.

Notes
Contributers that have agricultural or forestry income will be assesed differently.
Any quarter that results in no income still needs to be presented as a negative declaration.

This information is for guidance purposes only.