How to Have the Cash on Hand to Pay Taxes - Workcapital

How Can You Ensure You Have Cash on Hand When Tax Time Rolls Around?

Tax season often comes at a difficult time.

That’s why it’s essential to plan ahead and have the necessary cash on hand to cover them.

However, when it’s not possible to plan ahead, negotiating promissory notes and other working capital financing methods offer attractive alternatives for meeting your obligations, whether you’re self-employed or a business owner.

Annual Tax Calendar in Spain

Throughout the year, we must fulfill our tax obligations by making tax payments. To ensure you have no doubts and can fine-tune your projections, we’ve broken them down month by month.

First Quarter

In January, you must file and settle the forms for the previous fourth quarter:

• – By January 20, you must have filed the withholding tax return for personal income tax and rental income (Forms 111 and 115).
• – By January 31, forms 130, 131, 180, 184, 190, 303, 349, 390, and 369 must be filed, as applicable.

During this period, you must pay the VAT balance and the withholding taxes mentioned above.

In February and March, two informational forms are filed, which do not involve any payments:

• – Form 347. Reports transactions exceeding 3,005.06 euros.
• – Form 720. Reports on assets and rights held abroad.

Second Quarter

April marks the end of the first fiscal quarter of the year, so it’s time to file and pay taxes:

• – By April 20, you must file Forms 111, 115, 123, 130, 131, 202, 303, 309, 349, 368, and 369.

Payments for withholding taxes, VAT, and corporate income tax are due by this date.

This month also marks the start of the income tax filing season for the previous year, which concludes at the end of June.

Meanwhile, May 25 is the deadline for setting up direct debit payments for Form 100 (personal income tax refund or payment) and Form 714 (wealth tax).

Third Quarter

The cycle repeats itself; in July, we return to a critical date, in this case regarding the second quarter of the current year:

• – July 20. Forms 111, 115, 123, 130, 131, 303, 309, 349, 368, and 369.
• – July 25. Form 200, Corporate Income Tax.

There are no additional tax obligations or payments in August and September.

Fourth Quarter

After the summer break, tax obligations related to the previous quarter—the third quarter—resume:

• – The key date is October 20. Before this date, you must file the same forms as on July 20, plus Form 202 (Corporate Income Tax).
• – In November, it’s time to settle the VAT, file the tax return for tourist rentals in Spain, and submit Form 232 regarding tax havens.

– In addition to closing the books, December is when you must make an estimated payment for Corporate Income Tax (Form 202).

Options for Securing Liquidity to Cover Tax Payments

You must always plan ahead and be aware that a portion of your income consists of taxes to be passed on. This is especially true for collected VAT and withheld taxes.

Here are some options for maintaining liquidity and meeting your tax obligations:

• * Tax savings fund. This involves setting aside a portion of your revenue for these payments. No matter what happens, that money is off-limits.
• * Deferral. You can ask the Tax Agency for a deferral or to pay in installments, with the corresponding interest charges.
• * Credit for the self-employed and businesses. This involves securing external financing or a loan to cover payments. As in the previous case, there is an additional cost. Having an annual line of credit is a viable option, provided it is used wisely.
• * Advance payment of the invoice. A great way to maintain liquidity is to collect, prior to issuing the invoice, a percentage to be negotiated with the client. This percentage will depend on the specific needs of the industry.
• * Invoice advance. This service allows you to turn to a financial institution to have it pay you the amount of an invoice before it is due. In exchange, you pay interest and processing fees.

* Discounting or negotiating promissory notes. This alternative is similar to the previous one. It allows you to receive payment on promissory notes before their scheduled due date through a financial institution, in exchange for discount fees.

We Can Help You Pay Your Taxes

In short, there are many working capital financing services that can help you when tax payments are due.

These are useful resources that provide liquidity while giving you better control over your timeline.

Learn more about discounting promissory notes and invoice advances—request a quote with no obligation.

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