Penalties for failure to file annual accounts

All commercial companies are required to file their annual accounts with the Commercial Registry within one month of their approval by the shareholders' general meeting (Article 279 of the Spanish Capital Companies Act (Ley de Sociedades de Capital, LSC)).

If the management body fails to comply with this obligation, the consequence is the closure of the company's registry sheet (cierre de la hoja registral) (Article 282 LSC), which means that the company cannot register any document with the Commercial Registry until the filing obligation has been fulfilled.

In addition, Article 283 LSC governs the penalty regime for failure to file accounts. The penalty is imposed by the Spanish Accounting and Audit Institute (Instituto de Contabilidad y Auditoría de Cuentas, ICAC) after the corresponding proceedings have been conducted, and the amount may range as follows:

• Between €1,200 and €60,000.
• Up to €300,000 for each year of delay for companies or groups of companies with a turnover exceeding €6 million.

The penalty will depend on the company's turnover and asset items for the last financial year reported to the tax authorities.

The new development is that, on January 30, 2021, Royal Decree 2/2021, of January 12, approving the Regulations implementing Law 22/2015, of July 20, on the Audit of Accounts, was published in the Official State Gazette (BOE). It implements and quantifies the penalty regime for failure to comply with the obligation to file accounts and introduces the following changes:

• Time limit for deciding and notifying the penalty proceedings: the total time limit for deciding and notifying the decision in penalty proceedings will be six months from the adoption by the President of the ICAC of the decision to initiate proceedings, without prejudice to any suspension of the proceedings and any extension of the time limit as provided in the Common Administrative Procedure Law (LPAC).
• Quantification of the criteria for determining the amount of the penalty: The penalties will amount to:
  • 0.5 per thousand of the total amount of the asset items, plus 0.5 per thousand of the entity's sales figure included in the last tax return filed with the tax authorities (Corporate Income Tax (IS)), the original of which must be provided during the proceedings.
  • 2% of the share capital according to the data on record at the Commercial Registry, if the tax return is not provided.
• If the tax return is provided and the result of applying the aforementioned percentages to the sum of the asset items and sales exceeds 2% of the share capital, the penalty will be set at the latter amount reduced by 10%.

The amount of the penalties is subject to the limits set out in Article 283 LSC discussed above. In addition, if the annual accounts are filed before the penalty proceedings are initiated, the penalty will be imposed in its minimum degree and reduced by 50%.

These infringements become time-barred after three years.