Business activities income

This new release is based on Personal Income Tax annual returns reporting business activities income. As it includes information about each economic sector, it allows to know the yield of the business and professional activities carried out by personal businesses, professionals and other non-societal businesses, the weight of the businesses income with regard to total income, the number of economic activities reported, the failure rate per activity and, a particularly important element, the annual return outcome attributable to the economic activity and the effective tax rate related to such business or professional activity.

Which are the

sources?

information

PIT Law provides two systems in order to work out the self-assessed net income in Form 100: direct assessment scheme (art. 30) and objective assessment scheme (art. 31).

Direct assessment scheme: Either Normal or

Simplified method can be used. Objective assessment scheme: A distinction is made between non-farming and farming objective scheme.

Revenue coming from the income allocation system is included as net income in the annual return.

How is the

displayed?

information

Annual Return viewpoint Business activity viewpoint

Each annual return is considered as a data item and classifying criteria matching with the annual return features together with those criteria coming from other fiscal sources and complex algorithms are included.

Each bdzǎƛƴŜǎǎ ŀŎǘƛǾƛǘȅ ƛǎ ŎƻƴǎƛŘŜNJŜŘ ŀǎ ŀ Řŀǘŀ ƛǘŜƳ and the features related to the activity and to the individual who carries it out are studied.

SINGLE ACTIVITY

Annual return and activity viewpoints match when there is only one business activity reported. Due to the correspondence between both viewpoints, common features to both are studied:

One annual return – One entrepreneur – One activity

Tax on Economic Activities epigraph. Autonomous Community. Nationality. Gender. Age. Income assessment scheme.

Annual return classifying variables Acivity classifying variables

Main income source. Number of activities. Salaried people bands. Income sign. Income assessment scheme.

INCOME CONSTITUENTS AND NUMBER OF RETURNS

Estim

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ndi

rect

a

Estim

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nob

jetiv

a

Estim

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nag

raria

Impu

taci

ónER

AR

Rent

asTr

abaj

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C. M

obili

ario

C. In

mob

iliar

io

Estim

ació

ndi

rect

a

Estim

ació

nob

jetiv

a

Estim

ació

nag

raria

Impu

taci

ónER

AR

Rent

asTr

abaj

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C. M

obili

ario

C. In

mob

iliar

io

89,62

63,84

38,86

20.957

1.1541.534

55,78

12,61

27,49

2,61

47,31

68,55

46,5712.807

10.074

3.281

8.934

16.585

1.3681.736

NUMBER OF RETURNS BY INCOME 3.106.469

AVERAGE INCOMEAverage net tax base = 19.849

N I16.329.654

A = 20.854

A A I

A

I IA A

AI

I

A

7.829

7.849

21,22

18,68

GENERAL A595A I A225

GENERAL518AUTON I235

20,33

17,69

ENTREPRENEURS BAI

NON-ENTREPRENEURS19.138 19.254

19.375

20.350

20.854

19.000

19.500

20.000

20.500

21.000

2012 2013 2014 2015 2016

( )

4.8694.977

5.033

5.258 5.345

4.800

4.900

5.000

5.100

5.200

5.300

5.400

2012 2013 2014 2015 2016

( )

EntrepreneursBAI

15,83% Income allocation

entrepeneurs

0,95%

Non-entrepreneurs

83,22%

Number of returns

R AI19.849

E R AI6.964

NO E R20.854

NO R

5.345

NET TAX BASE AND TAX LIABILITY EVOLUTIONDATA 2016

17.095 16.915 17.038

18.831

19.849

16.500

17.000

17.500

18.000

18.500

19.000

19.500

20.000

2012 2013 2014 2015 2016

( €)

5.640 5.716 5.801

6.645

6.964

5.500

5.700

5.900

6.100

6.300

6.500

6.700

6.900

7.100

2012 2013 2014 2015 2016

otal ( €)

Business Activities Income

MAIN OUTCOMES. FISCAL YEAR 2016

TAXABLE BASE CONSTITUENTS

EFFECTIVE TAX RATE AND

FAILURE RATE

Income structure is meaningfully different depending on if entrepreneurs do hire employees or do not.

WITHOUT EMPLOYEES WITH EMPLOYEES

Businesses income is the main income source for 52% of entrepreneurs.

BUSINESS IS THE MAIN INCOME SOURCE FOR 65% OF ENTREPENEURS HIRING EMPLOYEES.IT IS ONLY 40% FOR ENTREPRENEURS WITHOUT EMPLOYEES.

Entrepreneurs with positive net income in direct assessment scheme bear a greater tax burden.

Business activities income can be negative. Direct assessment scheme returns include the highest failure rate.

BAI: Net income

65%

RAE: rentas imputadas

1%

Capitalincome

9%Earned income

18%

Rest of Taxable Base 7%

BAI: net income

40%

BAI: allocated

income 1%

Earned income

46%

8%

Rest of Taxable Base 5%

Capital Income

Net Income from

Businesses Activities

46%

Businesses Allocated

Income 1%

Earned Income

39%

Capital Income

9%

Rest of Taxable Base 5% Taxable Base

constituents for entrepreneurs BAI

21,12

7,3410,50

Simplified and Normal Direct

Assessment Schemes

Non-farming Objective Assessment

Attributable effective tax rate

23,05

4,9610,54

Directa normal ysimplificada

Objetiva no agrícola Objtiva agrícola

Tasa de fracaso

BUSINESS ACTIVITIES INCOME

Farming Objective Assessment

A SOLE BUSINESS

Effective Tax Rates in businesses with positive profit, following income sources and per activity.

Entrepreneurs with employees have higher effective rates on BAI than on the total taxable base. The same happens with artists, athletes and professionals without employees.

86,5% OF ENTREPRENEURS REPORT ONE BUSINESS ONLY.

88,8% OF ENTREPRENEURS WITH A SOLE BUSINESS REPORT POSITIVE INCOME.

20,3% OF ENTREPRENEURS WITH A SOLE BUSINESS HAVE EMPLOYEES.

8,05

22,87 22,72

10,17

10,1

22,39 20,85

11,17

0

5

10

15

20

25

30

35

Businesses Professionals Artists,,athletes and other

Farming andcattle

Effective rates of entrepreneurs without employees

Attributable effective tax rate PIT rate

17,75

30,69

23,07

15,9316,96

28,94

21,78

15,17

0

5

10

15

20

25

30

35

Businesses Artists,athletes and other

Farming andcattle

Effective rates of entrepreneurs with employees

Professionals

Attributable

effective tax rate

PIT rate

Business activities income