Business tax (IAE)

IAE is a tax levied on economic activities (business, professional and artistic) within the municipality, regardless of whether they are specified in the tax rates or whether the activity in question is carried out on specific premises.
The tax is only payable by companies and entities engaged in a business or artistic activity when their net turnover for the previous two years is equal to or greater than 1,000,000 euros. For example, a company with a turnover of 1,000,000 euros in 2018 would have to pay the tax in 2020.

Tax register

All persons, companies and entities engaged in an economic activity must register with the tax register of businesspersons, professionals and withholders of the Spanish Tax Authority by presenting Form 036 or Form 037, provided by the Spanish Tax Authority itself.

The calculation of the amount is based on the rates and instructions for business tax.

The weighting coefficient is then applied on the basis of the net turnover.

The charge is payable for the whole calendar year.

The net business turnover covers all the declared economic activities.

If the business activity is carried out in premises, the location coefficient for the category of the street is applied.

In the first year of registration of a business activity, the amount is calculated in proportion to the number of quarters remaining before the end of the year. For example, a registration on 15 April has to pay three quarters.

When the deregistration of an activity has been processed, the charge is calculated in proportion to the quarters in which it was registered. For example, a deregistration on 10 March would have to pay for one quarter. However, if the bill has already been paid for the whole year, you can apply for a refund of the portion for the rest of the year. 

Provincial Council surcharge
The Act on Local Tax Offices authorises the Provincial Council to levy a surcharge on economic activity taxpayers. This is a single percentage that is calculated on the municipal charge modified by the weighting coefficient. In Barcelona it is 35%.

Settlement, collection and review
Every year, the Spanish Tax Authorities send the tax registration to the Barcelona Municipal Tax Office, which includes the holders who carry out economic activities and have to pay the tax. On the basis of this registration, the Municipal Tax Office prepares the tax register and makes it public by means of an announcement that includes a period for presenting objections. At the end of this period, the bills are collected. 

The City Council carries out the settlement, collection and review of the acts ordered in tax administration proceedings. It comprises the following functions:

• The granting and refusal of exemptions and tax credits.
• The issuing of tax returns to determine tax debts.
• The issuing of collection documents.
• The issuing of decisions on proceedings for the refund of income.
• The issuing of decisions on appeals, provided for in Article 46 of Act 1/2006, of 13 March, on the special system of the municipality of Barcelona, with the effect of reconsideration, applying the legal system for appeals regulated in Article 14 of revised text of the Act regulating local tax offices, which are lodged against the aforementioned acts. 

IAE tax inspections

The Municipal Institute of Finance carries out IAE tax inspections on behalf of the Spanish Tax Authorities. In accordance with the provisions of Article 18.4 of Royal Decree 243/1995 (which dictates rules for managing the tax on economic activities and regulates the delegation of powers in the census administration of this tax), an economic/administrative claim may be lodged before the Regional Economic Administrative Court of Catalonia to challenge measures resulting from inspections that may lead to inclusion, exclusion or alteration of the census data when these measures are ordered by the City Council (after the mandatory filing of the appeal, referred to in Article 188 of the general tax byelaw). Until there is a decision on this appeal, expressly or by administrative silence, the economic/administrative claim cannot be lodged.    

• Business turnover comprises the amounts from the sale of products and the provision of services from the company’s ordinary activities (after tax credits and other reductions on sales, as well as value added tax and other taxes directly related to business turnover, are deducted).
• For taxpayers liable to corporation tax or non-resident income tax, the net business turnover is that of the year preceding the year in which the tax is credited.
• In the case of civil companies and the entities referred to in Article 35.4 of the General Tax Act (inheritances, community property and other entities that, lacking legal personality, constitute an economic unit or a separate taxable estate), the net turnover is that of the penultimate year prior to the year in which this tax is credited. If the tax period is less than one calendar year, the net business turnover shall be increased by one year.
• In order to calculate the amount of turnover, all the economic activities carried out must be taken into account.
• When the entity is part of a group of companies, the net business turnover refers to the group entities as a whole.
• For non-resident payers of income tax, the net business turnover is that of all the permanent establishments located in Spanish territory.

These declarations must be filed with the Spanish Tax Authority.

Declaration for registration:

The deadline for submitting the declaration of registration for starting a business activity in the municipality is one month from the start of the business activity.

Natural or legal persons exempt from paying the tax must file Form 036 or 037.

When the conditions for an exemption are no longer met, this can only be notified to the Spanish Tax Authority by means of Form 848.

Legal persons and entities obliged to pay the tax must file Form 036 or 037 and Form 840.

Declaration of deregistration:

In the case of a deregistration due to cessation of business activity, the declaration of deregistration must be submitted within one month of the date on which the activity ceased.

Natural and legal persons exempt from paying the tax must file Form 036 or 037.

Legal persons and entities obliged to pay the tax must file Form 036 or 037 and Form 840.

Declaration of change:

When there is a physical, economic or legal change (any change in the tax elements of more than 20% has to be declared). The declaration of change must be filed within one month of the date on which the change occurs; the tax effects apply in the year following the filing.

Natural and legal persons exempt from paying the tax must file Form 036 or 037.

Legal persons and entities obliged to pay the tax must file Form 036 or 037 and Form 840.

Information on business turnover

Companies and entities obliged to pay the tax must submit an annual declaration to the Spanish Tax Authority using form 848 to report the net amount of their business turnover.

It is not necessary to file Form 848 if the net business turnover has already been reported in other declarations, i.e. in the following cases:

• Credit institutions or insurance companies that are taxable persons subject to corporate income tax or income tax for non-residents with permanent establishment.
• Civil societies and entities covered by Article 35.4 of the General Tax Act: the following shall be considered taxpayers: inherited estates, joint ownership and other entities which, lacking legal personality, constitute an economic unit or a separate estate liable to taxation.
• Groups of companies that have indicated the amount in the corporate income tax return, in the non-resident income tax return or on Form 184 (Information return. Entities under the income attribution scheme).