It is advisable to keep up to date with all the fiscal, accountancy and legal obligations of your company when doing business in Spain in order to avoid unnecessary fines. The alleged unawareness of a tax law will not be considered as reason enough to avoid the consequent problems with the Spanish Tax Authorities. In short, it is your obligation to keep yourself informed.

Individual or Company?. Firstly, clarify that you may do business in Spain, either as an individual person or businessman, or as a corporation (limited company) or Private Civil Company. In order to decide on one or the other option, it is advisable to first take into consideration that if an individual, or businessman suffers economical problems, he will respond with his own assets, whereas a company will only respond with the company capital invested when it was incorporated.

Unlike other countries (such as, for example England) the Spanish fiscal year coincides with the natural calendar year, which is to say, it begins on the first of January and ends on the 31st of December each year. Therefore the accounts are closed on the last day of each year.

It is compulsory, both for individuals and companies, to obtain a Fiscal Identity Code or NIF. Companies are furthermore obliged to register with the Tax Authorities and at the Department of Economy of the Canary Island Government Delegation (authority that deals with the Canary Island VAT or IGIC).

Retentions made from business premises owners. When a company rents a business premises it is obliged to make a tax retention from the owner and to pay these retentions each quarterly to the Tax Authorities.

IGIC (Canary Island VAT) Secondly, it must submit the local VAT (IGIC) tax declarations each quarterly and furthermore prepare two balance sheets per year for the IGIC:

Tax declarations for transactions that exceed 3.000 €. A tax declaration must be submitted during the month of March (model 347) which serves as a cross reference for the details provided by the company, with its clients and suppliers, who must also make the same tax declaration. Consequently the figures provided by both parties involved should coincide.

Payment on Account. The companies that obtain a profit should furthermore make three payments on account of the corporate income tax. This will later be deductible.

Quarterly tax declarations. Individuals are obliged to make quarterly tax declarations (during the first twenty days of January, April, July and October) in which they will detail the volume of income received during the previous quarterly and the expenditure deductible from the income. If the balance of the quarterly shows a profit they will become obliged to make a payment on account to the Tax Authorities, which will ultimately be deducted from their yearly individual income tax declaration (IRPF) that should be submitted during the month of May and June each year. There is also a certain system known as a "system by modules" for certain business activities.

Company Services. Any persons providing remunerated services for a company should also make a yearly income tax declaration for individual persons.

Corporate Income Tax. The month of July is the most important month for companies, as during the first 25 days of this month they are obliged to submit the yearly tax declaration for corporate income tax. Furthermore, the directors are obliged to examine the yearly accounts for approval at the yearly board meeting. These accounts should be duly signed by the directors. Corporate income tax should be submitted to the Tax Authorities and the yearly accounts should be deposited at the corresponding Registry of Companies. The automatic and immediate procedure of the Tax Authorities upon non fulfilment of these tax obligations is to send a notification. The Tax Authorities are not at all flexible regarding the time limits for the submission of tax declarations.

Accountancy. Companies are obliged to prepare their accountancy using a special legal format in accordance with the so called general accountancy plan. This accountancy will be bound and legalized for submission during any posterior inspections.

Social Security. Apart from the obligations already specified, individuals and also at least one of the directors of a company should be registered with the Spanish Social Security and pay the monthly autonomous insurance.