Modelo 202: How Corporate Income Tax Installment Payments Work in Spain

If your company pays Corporate Income Tax, you don’t wait until the following year to pay: during the financial year you make payments on account through Modelo 202. Understanding how it is calculated lets you plan your cash flow and avoid overpaying in 2026.

What Modelo 202 is and when it is filed

Modelo 202 is the return for installment payments on account of Corporate Income Tax. What you pay during the year is later deducted in Modelo 200, the annual return, so it is not an additional tax but an advance payment.

For companies whose financial year matches the calendar year, which is most of them, there are three filings:

• April: 1st to 20th.
• October: 1st to 20th.
• December: 1st to 20th.

If the financial year doesn’t match the calendar year, the deadlines shift according to the year’s start date. It’s best to confirm them on the Spanish Tax Agency (AEAT) website. The October 2026 deadline has already passed. If you didn’t file and you are required to, regularize your situation as soon as possible to minimize surcharges.

The obligation applies even if the company has losses, although the resulting payment is then usually zero. You still file when it is due, and the prudent approach is never to assume that nothing needs to be filed without checking first.

The two methods: Article 40.2 and Article 40.3

The Corporate Income Tax Act offers two ways to calculate the payment.

Article 40.2 (the default method). It is calculated on the tax liability of the last financial year whose filing deadline has already passed. A percentage is applied (18% of that liability, reduced by deductions, allowances and withholdings borne), and the result is paid in each of the three installments. It is convenient and predictable: the amount is known in advance and doesn’t depend on how the current year is going.

Article 40.3 (based on the current year). It is calculated on the cumulative taxable base for the first 3, 9 and 11 months of the calendar year, applying a percentage that, for most companies, is lower than the general tax rate (around 17%). Each payment is reduced by the amounts already paid in the same year. It reflects what is really happening this year, but it requires keeping your accounts up to date at each cut-off date.

Larger companies (those with high turnover in the previous twelve months) are required to use the 40.3 method, under its own rules. If that applies to you, check the current thresholds before filing.

The 40.3 option is exercised through the census return (Modelo 036) before the first payment of the year, within the period set by the regulations. Once chosen, it remains in force in later years until you renounce it.

When it pays to switch methods

The key is to compare last year with the current one.

• 40.3 is worth it if you expect to earn less this year than last year: losses, falling sales, heavy investment or an exceptional prior year. You will pay less and improve your liquidity.
• 40.2 is worth it if you expect to earn more, because you prepay less and avoid cash-flow peaks. It’s also the better choice if you don’t want to close your books three times a year.
• Newly formed company: with no prior year there is no reference liability, so 40.2 gives no payment due. Consider 40.3 if you are already making a profit.

An example with round numbers: a company with a tax liability of €10,000 the previous year would pay about €1,800 under 40.2 in each of the three installments. If this year’s cumulative taxable base after nine months is only €15,000, 40.3 would give roughly €2,550 cumulatively, from which the payments already made would be subtracted. The cash saving is obvious in a weak year. This is a simplified example: the actual percentages and deductions depend on your situation.

Common mistakes

Forgetting that the company must also file when it has losses, mixing up the percentages of the two methods, failing to deduct withholdings or previous payments, switching methods after the deadline, and not reviewing the option every year.

At Zythos Business we keep the books of freelancers and SMEs up to date, so we can simulate both methods each year before the first payment and help you choose the one that best fits your cash flow, as well as file Modelo 202 on time.