Year-End Checklist for Your Company’s Tax Planning

The tax planning process is essential for any company, especially when closing the fiscal year. Preparing in advance allows you to take advantage of tax incentives, optimize resources, and minimize the tax burden within the legal framework.

To help you organize this key task, we’ve prepared this end-of-year checklist for the tax planning of your SME or company.

 

Accounting and tax advisory for companies

 

Review of annual income and expenses

The first step toward proper tax planning is to thoroughly review the income and expenses incurred throughout the year. This analysis forms the basis for determining the accounting result which, according to the Corporate Tax Law, is the starting point for calculating the taxable base.

1. 1. Gross and net annual income: analyzing the level of income and comparing it with the initial budget will help you adjust strategies and make decisions regarding potential investments or additional expenses.
   2. Review of deductible expenses: it’s crucial to review all deductible expenses such as salaries, rents, utilities, and other operating costs. For an expense to be deductible, it must be correlated with income and properly justified. Remember that some expenses are not tax-deductible.
   3. Depreciation of assets: make sure you’ve correctly applied the depreciation of your assets. Asset depreciation is a tax-deductible expense that helps reduce the taxable base and is essential to maximize tax benefits.

Take advantage of deductions and tax benefits

Good tax planning involves identifying and maximizing all deductions and tax benefits available before the year ends. For example:

1. 1. R&D&I deduction: if your company has made investments in research, development, or technological innovation, it may be entitled to a significant tax deduction.
   2. Job creation deduction: check whether your company has hired workers who may generate tax benefits, such as people with disabilities or those at risk of social exclusion.
   3. Incentives for SMEs: small and medium-sized enterprises have access to specific benefits, such as reduced tax rates, provided they meet the requirements to qualify as such—meaning they must carry out a genuine economic activity, as established by case law.

Preparation and filing of taxes

Finally, organize all the necessary documentation to correctly file your year-end tax returns:

1. 1. Accounting close: carry out the accounting close ensuring all income and expenses are recorded in the appropriate fiscal year.
   2. Preparation of Corporate Income Tax: Corporate Tax is the main tax affecting businesses in Spain. Prepare the necessary documentation for its filing in advance to reduce the risk of errors that could lead to penalties.
   3. Verification of withholdings and installment payments: make sure the withholdings and installment payments made throughout the year are properly recorded so they can be deducted from the tax liability.

Inventory closing and stock valuation

If your company manages inventories, performing a detailed review of stock is an essential step in tax planning:

1. 1. Inventory valuation: assess the value of stock to include it in the year-end balance sheet. Inventory valuation affects the Corporate Tax base, so it’s important to ensure it’s up to date.
   2. Adjustments for obsolescence or deterioration: if you have obsolete or damaged products, you can create a provision to adjust their value. This depreciation must be justified by a real decline in market value, not by mere estimates or the simple passage of time.

Offsetting negative taxable bases

If your company has recorded losses in previous fiscal years, you can use negative taxable bases (NTBs) to reduce the taxation of current profits.

According to the law, these losses may be offset against positive income in future fiscal periods, with a general limit of 70% of the prior taxable base. In any case, up to 1 million euros may be offset.

Making contributions to corporate pension plans

Contributions to employee pension plans not only improve the workplace environment but also provide tax benefits:

• These contributions are considered tax-deductible expenses under Corporate Tax, helping reduce the taxable base.
• They also represent a social benefit for employees that can improve talent retention.

✅ What conclusion can we draw?

Proper tax planning at year-end is a strategic task that enables companies to optimize their resources and meet tax obligations efficiently.

This checklist provides a comprehensive guide to taking advantage of deductions, managing provisions correctly, and closing the fiscal year without surprises.

Consulting with a tax or accounting advisor can help you apply each step in a personalized way and maximize tax benefits according to your company’s characteristics and needs.