What is a large company from a tax point of view? In the business sphere, the concept of Large Company implies a series of fiscal effects that entail specific advantages and obligations, which have a direct impact on the tax management of this type of organisation.
In this article we explain what is considered to be a Large Company, what requirements must be met and what the main tax obligations and benefits are.
What is considered a Large Company for tax purposes?
Index of contents
Firstly, a large company is considered to be an organisation, entrepreneur or professional whose turnover in a year exceeds 6,010,121.04 euros.
To calculate the volume of operations, the total of the supplies of goods and services carried out by the taxpayer during the calendar year is added together. Those exempt from tax must be included.
If a company exceeds the established limit, it must change its relationship with the Tax Agency and comply with a series of additional obligations.
Requirements to be a Large Company
For a company to be considered a Large Company, it must meet the following requirements:
- The volume of operations must be greater than 6,010,121.04 euros: As we have seen, this is the essential requirement for the Inland Revenue to include a company in this category.
- Calculation: To calculate the volume of operations, the previous tax year is considered.
Tax obligations of large companies
Entities that are considered Large Companies must comply with a list of tax obligations:
- Notification to the Tax Agency that they have exceeded the limit and become a Large Company. This is done by means of form 036 within one month of 1 January of the current year.
- VAT must be filed monthly and electronically. Form 303 will be used for this purpose.
- The same applies to form 111 (withholdings and payments on account) and the rest of the withholdings forms, which must be filed monthly and electronically.
- The registry books must be kept using the SII (Immediate Supply of Information).
- If the net turnover exceeds 6 million euros, the instalments must be calculated in accordance with Article 40.3 of the Corporate Income Tax Act.
- Large companies are obliged to receive electronic communications from the Tax Authorities and must submit any tax documentation online.
Benefits of being a Large Company
In addition to the obligations, there are a series of advantages that large companies can enjoy, such as:
- Possibility of applying the tax consolidation regime. If the requirements are met, the company will be able to benefit from the tax consolidation regime which allows groups of companies to pay corporation tax jointly, thereby reducing the tax burden and simplifying procedures.
- Ease of access to finance. Large companies tend to obtain financing more easily and on better terms. This helps them to develop new projects or to internationalise the organisation.
- Greater competitiveness. They will have a solid image in the market and this will allow them to be more competitive, attract and retain talent and be able to innovate in products and services according to the new needs and trends that arise.
Consequences of losing Large Company status
It may also happen that an entity ceases to meet the requirements to be considered a Large Company. In this case, the following obligations must be taken into account:
- Submission of form 036 to notify that it has ceased to have the status of Large Company.
- Form 303 must be filed quarterly, except in the case of companies registered in the REDEME (Monthly Return Register).
- Quarterly filing will be applied to form 111 and others relating to withholdings.
- The exit from the SII takes place and the company would no longer be obliged to report VAT registration books in real time.
As we have seen, for an organisation to be considered a Large Company for tax purposes implies fiscal responsibilities that must be considered in order to avoid errors and tax inspections. It also implies the application of tax and other benefits that will have an impact on the organisation’s economic and financial strategy.
If your company is close to becoming a Large Company or already meets the requirements, you must have the right tax and legal advice. At Leialta we can help you manage all these aspects and ensure that you comply with the law rigorously. Contact us to analyse your case, verify whether you meet the requirements to be considered a large company and manage all the necessary procedures to report it to the Tax Agency.
