These first days of 2018 should be used by companies not only to close the VAT section, but also to collect all the relevant information for tax purposes for the income tax return, which will have to be done in a few months, something that some forget until that moment arrives. However, there are things that if they have not been done until December 31, then they cannot be modified.
We want to give you a few tips that will be useful to anticipate the annual closing of accounts, and for the beginning of 2018.
- Study changes in the tax regime. Those businessmen or professionals who pay taxes by direct estimation may be interested in changing to module taxation, or vice versa. In some cases, for example in small hospitality establishments, taxing by modules can have a very large tax advantage, because the rates are usually per square meters of the premises or per workers.
- Recover invoices. “Many times we waste collecting invoices, small amounts that accumulate in the long run.” The advice is to search through the papers on the table, in the drawers, and collect them all, to be able to declare it as a deductible expense. And you don't just have to think about VAT, because there are activities that are exempt but that count towards income.
- If you are an entrepreneur or self-employed person in the first two years of activity, you must remember that during the first two years you have the possibility of deducting a 20% from your profit. This reduction in profit will also have effects on Corporate Tax, with a reduction in the rate.
- Postpone declaration of expenses. The Treasury never allows you to postpone the declaration of income, but it does allow you to postpone the declaration of expenses. There are times when it may be interesting to postpone expenses to next year if a larger billing is expected. The key is that personal income tax is a progressive tax, unlike corporate tax, so if this year you have had weak returns and in the end you have had to face a large expense, you may want to postpone reporting any expenses. This possibility requires detailed study.
- Do you work at home? There are new deductions in 2018. For businessmen and professionals who pay personal income tax and self-employed workers and professionals who work at home, some household supplies can be deducted. Specifically, the 30% of the supplies in proportion to the part of the house that is used. We talk about utility bills (electricity, water, gas, Internet). Even if it is a small amount, there is that possibility and it should not be discarded, although it does require informing the Treasury that you are working at home. And also be careful if you are paying a mortgage, because if you deduct professional activity expenses you cannot deduct the mortgage for that space in the house.
- The allowances for the self-employed in 2018. The other tax measure that comes into force is that the self-employed will be allowed to apply the maintenance allowance that employed workers already have. Up to an expense of 26.67 euros is exempt from taxes, and up to 53.64 if you spend the night in another location.
- Reflect property losses. If you lose money you must also declare it, because the only way to recover it in subsequent years is to have reflected it. Sometimes the tax data is not correct, because the Treasury does not know if you have sold a house or when you bought it or the purchase and sale value of some shares. You must request the information from the bank.
This list is a list, far from exhaustive, of some aspects with tax implications to consider in these first days of the year. But if you want to be sure of carrying out the transition of a year correctly from a tax point of view, we advise you to consult with our experts who can help you.
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