The Constitutional Court rules on the method used to calculate corporate income tax prepayment for large companies

The debate on the minimum installment payment under Royal Decree-Law 2/2016 remains open:

Last Thursday, November 20th, the Constitutional Court, in information note No. 96/2025, dismissed the question of unconstitutionality regarding the possibility of regulating corporate income tax prepayments for large companies. The ruling stems from a company that alleged a violation of the principle of economic capacity, since the amount paid in instalments was higher than what the company had to pay when settling the final tax. 

The Constitutional Court's ruling argues that the method in question does not tax ‘unreal’ or ‘fictitious’ income but rather makes a reasonable measurement of income in real (not estimated), net (not gross) and current (for the current financial year) terms. In effect, the amount of prepayments is calculated by applying a rate of 23% to the positive accounting result of the profit and loss account for the first three, nine or eleven months of each calendar year, while the general tax rate is 25%. The accounting result may be equal to, greater than or less than the tax base.

The ruling concludes that this is a reasonable method of quantification because the accounting result is a true reflection of the entity's profits. It emphasizes that prepayments are a type of payment on account that is also applied in other taxes such as personal income tax. They are an autonomous and provisional tax obligation with respect to the main tax obligation. They act as advance payments intended to facilitate collection and ensure regular compliance with tax obligations. However, it should be noted that several judges have issued dissenting opinions, which shows that this is a complex issue that is open to different interpretations within the Court.

It is also important to note that the issue of the minimum prepayment applicable to large companies —introduced by Royal Decree-Law 2/2016 and maintained in subsequent financial years— has not yet been definitively resolved by the Constitutional Court. Although the ruling analysed endorses the general method of calculation based on the accounting result, it does not assess the constitutionality of the reinforced minimum regime, which is still pending a ruling. Therefore, the legal debate on whether this minimum payment respects the principles of economic capacity and proportionality remains open and with possible implications for future litigation.