Direct estimation What is it and what does it consist of?

If you have doubts about what the direct estimation and what it is about, then stay in this article so that we can answer all your questions and that you meet your goals in your business.

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Direct estimate

To talk about the direct estimation, first we have to mention the existence of the Personal Income Tax, It is a type of personal tax that is implemented in the Spanish government, for its residents.

We all know what taxes are, it is a debt that has to be paid by all the residents of a place, which the government imposes in order to maintain an economic market in movement, as well as to invest in material and quality of life for its entire population.

The direct estimate currently

Currently, people who do not have a source of income have to be considered, and given options so that they can repay them, without giving them future debts that lead them to ruin. Therefore, every person who has a constant and reliable source of income should pay their taxes, whether they are a worker, entrepreneur, laborer or FreeLancer.

The Spanish government has a specific way of calculating the tax for certain people, for better accessibility and consideration of its population, in which the direct estimation to be able to specify different numbers needed for the process.

Normal Direct Estimate

It is the only possible way to calculate the Personal Income Tax if the amount of that person's turnover turns out to be greater than €600.000 and for those people who have waived the simplified estimate.

It is important to know that this is a way for the taxpayer to pay the necessary amount and this method is applied to determine the economic activities carried out by the taxpayer, but the following requirements must be met.

  • That there is more than 600.000 euros of turnover per year.
  • That the simplified modality of the direct estimation method be renounced.

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Formal obligations depend on the following cases:

  • The Commercial Code, based on the General Accounting Plan, establishes that the self-employed who proceed to carry out commercial activities must maintain an accounting, as a form of administration.
  • Citizens who have non-commercial activities (whether agricultural, livestock or artisan), who sell their products without intermediaries, must have a sales and income book, in which they manage their corresponding management and administration, including VAT expenses.
  • You can only deduct the expenses that are related to the goods affected by the economic activity, according to art. 29 LIR. Expenses related to unaffected assets cannot be deducted. The art. 29.2 LIR establishes that; In no case, are indivisible assets, such as cars, susceptible to partial affectation.
  • To determine the corresponding value, the general rule must be applied in case of equity gains and losses, which is established in the legislation in the Personal Income Tax.

Direct Estimate

At Lóleo Eventos, direct estimation Two types of trade are established and mentioned, we mention them below:

  • Internal: the goods and services that the taxpayer allocates for his own use or consumption. In this case, the market value of the good or service is taken into account.
  • External: provide goods or services to third parties free of charge or at a price below the market price

Income: It is the money that is received as part of the payment of a sale or provision of a service.
Expenses: The expenses necessary to obtain income, that is, if we have a cyber, we need computers, tables, chairs, personnel, social security, premises, electricity, etc. but expenses such as office supplies would not make sense.

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Simplified direct estimation

It is a type of normal direct variation, but in this case the following is mentioned:

  • In this case, the taxpayer must not waive the estimate in a simplified way.
  • The net turnover of all the taxpayer's activities must not exceed €600.000.
  • They must not be under the target rate estimation regime, and not have renounced it.
  • That the taxpayer follow the consistency in their activities in the simplified direct estimation regime, that is, if we carry out several activities we cannot have some in normal direct estimation and others in simplified.
  • Results for the year (Net income from the person's activities): Its calculation is carried out in the same way as in the normal direct estimate (according to the regulations of the Corporation Tax).

It is important to mention that, to the total return as a final result, 5% can be subtracted as a difficult justification. That is, if we have not received an invoice, due to deterioration of some element or material, and even tickets or invoices with payment of dubious origin.

formal obligations

  • With activities at the business level, outside of a normal regime, it is not mandatory to carry out accounting, but sales and income books are used, in which purchases, expenses and/or investment goods are managed.
  • With activities at a professional level, a provision book must be used from each of the funds and the advances to events (supplied).

If a Transfer of Equity Elements is required, the process must be used in the same way, with the normal direct estimation (regulation in case of equity gains and losses).

Importance

By direct estimation, the performance of any economic activity can be disclosed, provided that all the values ​​of each movement (payments, income, investment, etc.) are handled correctly. They must be well managed, so that through this yield the payment of personal income tax can be calculated.

If you want to understand how capital management works and how to manage income, I invite you to see this interesting article: Financial expenses.

We hope that the article has been useful to you, if you want more information, we recommend that you review the video that we leave here below.


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