The fiscal year-end closing is crucial in the financial management of a company, as it marks the end of an economic period and the preparation for tax settlement. Carrying out this process efficiently and correctly is essential to avoid errors that could result in penalties or financial losses. Below is an updated guide to performing your company’s fiscal year-end closing in 2024.
Annual Accounting Review
The first essential step in any fiscal year-end closing is to conduct a thorough review of the year’s accounting. It is key to ensure that the accounting records are up to date and that all financial information is correctly reflected. This includes income, expenses, amortisations, and provisions. The digitalisation of accounting processes through advanced accounting software can greatly facilitate this task.
It is important to bear in mind that tax authorities are tightening controls over the accuracy of accounting records. Therefore, having an updated and adequate system is crucial to avoid possible inspections or penalties.
Fiscal and Accounting Adjustments
During the accounting review, it is common to identify discrepancies that require fiscal adjustments. These adjustments may relate to errors in accounting entries or the incorrect application of tax regulations. For example, deductions for certain expenses that are not tax-deductible, such as fines or penalties, must be corrected to avoid incurring sanctions.
In 2024, it is also important to review the latest tax updates applicable to Corporate Tax, including changes in deductions for R&D, investments in sustainability, or digitalisation.
Amortisations and Provisions
Another key aspect of the fiscal year-end closing is the proper accounting of asset amortisations and provisions for potential debts or contingencies. Companies must ensure that asset amortisations have been calculated correctly and adjusted to the current tax criteria.
Regarding provisions, it is advisable to review whether there are uncollectible debts or financial risks that require an adjustment in the accounts. This not only improves the accuracy of the financial balance but may also generate significant tax deductions.
VAT and Other Tax Checks
Value Added Tax (VAT) is one of the most closely monitored taxes by the Tax Agency. When performing the fiscal year-end closing, it is vital to verify that all VAT returns (Form 303 and 390) have been correctly submitted and that the calculations match the issued and received invoices.
Additionally, for companies operating internationally, it is crucial to ensure compliance with the current regulations on VAT in cross-border transactions. In 2024, new rules have been introduced at the EU level, so it is advisable to review the correct application of the One-Stop Shop (OSS) regime if the company makes sales to customers in different countries.
Tax Declaration
Once the accounting is in order, the time comes to submit the Corporate Tax return, which is usually the main fiscal obligation at the year-end closing. It is essential to review all tax bases, deductions, and applicable allowances. In 2024, deductions for R&D&I activities remain, which can be very advantageous for companies investing in innovation.
Furthermore, companies that have made sustainable or digitalisation investments can benefit from additional tax deductions, a measure that remains part of the fiscal incentives to promote economic development and the green transition.
Submission of Annual Accounts
After the fiscal year-end closing, companies must submit their annual accounts to the Companies House. This procedure is mandatory and must be completed within six months following the end of the financial year. The accounts must include the balance sheet, the profit and loss account, the statement of changes in equity, and the report.
It is important that the submitted accounts are in line with the accounting and tax records, as any discrepancies could result in penalties.
Review of Results and Tax Planning
Finally, after closing the financial year, it is crucial to review the financial results and analyse the company’s situation. This not only helps to detect possible errors or areas for improvement but also allows for effective planning for the next financial year.
In 2024, tax planning remains an essential tool for reducing the tax burden legally and efficiently. Companies can benefit from tax incentives for hiring, investment, and sustainability, among others, provided that proper planning is carried out in advance.
