Form 202: How Corporate Tax Instalment Payments Work in Spain

If your company is subject to Corporate Tax, three times a year you have to deal with Form 202: the self-assessment for instalment payments, an advance on account of what the company will ultimately owe for the current year’s tax. Here we look at how it’s calculated, what separates the two methods allowed under the law, and when it makes sense to switch from one to the other.

What Form 202 Is and Who Has to File It

Form 202 must be filed by companies and other Corporate Tax payers whose tax liability for the last tax period was positive, as well as those required to use the taxable-base method. In practice, if your company made a profit last year, you’ll need to file Form 202 even if the amount due comes out at zero in a given quarter: filing is mandatory, not just payment. Newly incorporated companies are usually exempt from instalment payments in their first year, since there’s no prior tax liability yet to base the calculation on.

Article 40.2 Method vs. Article 40.3 Method

The law offers two ways to calculate each payment, and choosing the right one can make a real difference to the company’s cash flow.

The Article 40.2 method applies by default unless you opt out. It’s based on the full tax liability from the last tax return already filed (adjusted for deductions, tax credits and withholdings) and applies a fixed rate of 18%. It’s straightforward because it looks backward: it doesn’t depend on how the current year is going, only on the result of the previous one. That makes it predictable, but it can work against you if business has slowed down and you’re still paying based on a better year that’s already behind you.

The Article 40.3 method, by contrast, looks forward: it’s calculated on the actual taxable base for the first three, nine or eleven months of the current year, applying a rate obtained by multiplying the tax rate by 5/7 and rounding down (for the general 25% rate, that works out to 17%). It’s optional for most SMEs and self-employed professionals operating through a company, but mandatory for companies whose turnover in the previous year exceeded roughly €6 million.

A round-number example: a company with an adjusted tax liability of €20,000 from the previous year would pay 18% of that figure at each of the three deadlines under the 40.2 method — €3,600 each time — regardless of how the current year is going. If that same company chose the 40.3 method instead, and after nine months its cumulative taxable base came to €60,000, the October payment would be roughly 17% of that base — around €10,200 — minus whatever was already paid in April. If business is worse than last year, the 40.3 method usually works out cheaper; if it’s better, it usually works out more expensive, always in proportion to actual results.

When It Pays to Switch, and the Filing Calendar

Switching to the 40.3 method usually pays off when you expect the current year to be worse than the last one — lower sales, losses, or a one-off year with extraordinary profits that are now behind you — because it avoids prepaying tax on a base that no longer reflects the business’s real situation. It can also suit fast-growing companies that prefer to spread payments more gradually, in line with how the year is actually going. Conversely, if business is better than the previous year, staying on the 40.2 method is usually better for cash flow, even though it means a larger true-up when Corporate Tax is filed.

The election for the Article 40.3 method is made through a census return (Form 036) filed during February of the year it’s meant to take effect, or within the deadline for starting activity if you opt in from the company’s first year. Once chosen, it binds the company for subsequent years, unless expressly revoked — also in February, via the same census return.

As for the calendar, Form 202 is filed three times a year, within the first twenty calendar days of April, October and December, corresponding to the first three, nine and eleven months of the tax year (assuming it matches the calendar year). It’s worth marking these dates well in advance: filing late, even when the result is zero, can trigger notices and surcharges.

At Zythos Business we help self-employed professionals and SMEs navigate decisions like this one — on paper just a routine quarterly formality, but one that, handled well, provides real relief for the company’s cash flow. We review each case to determine which method fits best, calculate and file the instalment payments on time, and make sure they align with the Corporate Tax that will ultimately be settled at year-end.