The tax side of bidding: joint ventures, grants and being up to date
Nextica Law & Tax handles the tax obligations that arise from contracting with public authorities: tax registration and formal obligations of the temporary business grouping, with its results attributed to the member companies under the special regime the Corporate Income Tax Act reserves for joint ventures; taxation of grants received and their timing; VAT treatment of transactions with the public sector; and the certificates of being up to date with the national and regional tax authorities, required to contract and required again to be paid.
A joint venture is not taxed like a company, and its first financial year is almost always closed on the wrong basis.
What's included
1. Tax registration and formal obligations of the joint venture from incorporation, which begin before the contract generates a single euro of income.
2. Keeping the joint venture's periodic filings and coordinating its year-end with each member company's, because the result is attributed to them.
3. Determining the VAT treatment of transactions with the public sector and of those the joint venture carries out with its own members.
4. Analysing the taxation of grants received and, above all, their timing, which is what gets argued about most.
5. Obtaining and renewing certificates of good standing with the national and regional tax authorities, required to contract and required again to be paid.
6. Reviewing withholdings and contract invoicing, so that what is declared matches what the authority reports.
7. Closing and winding up the joint venture for tax purposes when the contract ends.
A JOINT VENTURE IS NOT TAXED LIKE A COMPANY, AND CERTIFICATES EXPIRE
Two things that catch out newcomers to public procurement, and both are discovered late:
The joint venture meets its own registration, accounting and reporting obligations, but its result is attributed to the member companies. If each closes separately on different bases, the reconciliation arrives late and badly.
Law 18/1982 and the special regime of the Corporate Income Tax ActBeing up to date with tax and social security is required to contract and required again to be paid. A certificate that expires at the wrong moment freezes payment of an invoice already approved.
Law 9/2017Receiving a grant does not close the matter
it enters the taxable base, and what is argued about most is not whether it is taxed but when, depending on the nature of the aid and the expense it is tied to.
Law 38/2003Frequently asked questions
Does a joint venture pay corporate income tax?
Temporary business groupings have a special regime under the Corporate Income Tax Act: the joint venture meets its own registration, accounting and reporting obligations, but its result is attributed to the member companies, which include it in their own taxable base in the agreed proportion. In practice that means two things: closing the joint venture's accounts conditions each partner's own close, and the calendar has to be coordinated. If each member closes separately on different bases, the reconciliation arrives late and badly.
Is a grant taxable?
Receiving it is not the end of the matter. Grants are included in the taxable base of the relevant tax, and what is most often argued is not whether they are taxed but when: the timing depends on the nature of the aid and on which expense or investment it is tied to, and a capital grant is not treated like an operating one. It is best to settle the basis when applying rather than when closing the year, especially where the grant must also be justified to the awarding body, because both sets of books have to tell the same story.
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