The 2024 accounting year-end is not a single event at the end of December — it is the outcome of a process that, properly managed, should begin in the fourth quarter with a set of preparatory actions that prevent rushed corrections in the first months of 2025. This guide covers the key areas every company should review before 31 December and the legal timelines governing the preparation, approval and filing of annual accounts.
Legal Timelines for the Year-End Process
The regulatory framework for the year-end close is set by the Spanish Commercial Code and the Companies Act:
- 31 December 2024: Close of the accounting period for companies whose financial year coincides with the calendar year.
- 31 March 2025: Deadline for the board of directors to prepare the annual accounts (balance sheet, profit and loss account, statement of changes in equity, cash flow statement and notes).
- 30 June 2025: Deadline for the ordinary general meeting to approve the annual accounts.
- 31 July 2025: Deadline for filing the annual accounts at the Mercantile Registry (within one month of approval).
- 25 July 2025: Deadline for filing the corporate income tax return for fiscal year 2024 (for calendar-year companies).
Failure to file annual accounts at the Mercantile Registry on time results in the closure of the company’s registry page — preventing the registration of any new documents — and administrative fines ranging from €1,200 to €60,000 depending on the company’s revenue.
Inventory and Stock Valuation
The accurate valuation of inventories at 31 December is one of the highest-impact items in the year-end result. The Spanish General Accounting Plan (PGC) requires that inventories be carried at acquisition cost or production cost, not exceeding net realisable value (estimated selling price less the costs necessary to make the sale).
Companies must carry out a physical stock count before the close and reconcile the results with the accounting records. Inventory differences — physical stock lower than the book records — represent a loss that must be recognised in the current year. Companies working with imported raw materials or goods must also review the exchange rate applied under their chosen cost method (FIFO or weighted average), as 2024 exchange rate movements may have a material impact.
Provisions: Mandatory Recognition
The prudence principle in the PGC requires provisions to be recognised when there is a present obligation — legal or constructive — arising from a past event, and it is probable that settlement will require an outflow of resources. The most common provisions to review at year-end are:
Doubtful debt provision. Receivables outstanding for more than six months, or from counterparties in insolvency proceedings, must be provisioned. The Corporate Income Tax Act (Article 13 LIS) sets deductibility criteria for these provisions that do not always align with accounting criteria: balances from debtors more than six months overdue or in insolvency proceedings are deductible, but secured receivables and balances owed by related parties are not.
Warranty and returns provision. Companies with commercial warranty policies must estimate the provision based on the historical claims experience.
Litigation provision. Where the company has ongoing judicial or administrative proceedings with an uncertain outcome, the legal counsel’s opinion on the probability of an adverse ruling is the document that supports the accounting estimate.
Impairment of financial investments. Equity stakes in other companies must be subject to an annual impairment test. Where the carrying amount exceeds the recoverable amount (higher of value in use and fair value), the impairment must be recognised through profit or loss.
Depreciation: Review of Estimated Useful Lives
The depreciation schedule should be reviewed annually to confirm that the estimated useful life of each asset remains reasonable in light of its condition and sector technological developments. The Corporate Income Tax Regulations (RIS) set depreciation tables with maximum coefficients and minimum periods that determine tax-deductible depreciation. Differences between accounting depreciation and tax depreciation generate temporary differences that must be recorded as deferred tax assets or liabilities.
In 2024, companies that have acquired software or artificial intelligence assets should pay particular attention to the accounting treatment: PGC guidance and ICAC consultations clarify that software specifically developed for the company can be capitalised as an intangible asset and amortised over a maximum of ten years, while standard software acquired under licence may be amortised over three years.
Bank Reconciliations and Balance Confirmations
Bank reconciliation — verifying that each bank statement balance matches the corresponding ledger account balance — must be carried out for every active account. Common differences arise from outstanding cheques not yet presented, transfers in transit, or bank errors. All differences must be supported by documented explanations.
Additionally, the following balances must be reconciled:
- VAT: The VAT collected and VAT paid ledger balances must agree with the Form 303 returns filed during the year and with the annual Form 390 summary.
- Withholdings: Withholding tax balances (accounts 473 and 4751) must agree with Forms 111, 115 and 123 filed throughout the year.
- Trade receivables and payables: Verify that customer and supplier balances agree with counterparty statements. Balance confirmation procedures with significant customers and suppliers reduce the risk of differences being flagged by auditors.
Tax Adjustments for the 2024 Corporate Income Tax Return
The accounting profit is the starting point for calculating the corporate income tax base, but the Corporate Income Tax Act (Law 27/2014) establishes numerous differences between accounting and tax treatment:
- Non-deductible expenses: Fines and penalties, gifts without a specific agreement framework, donations, and director remuneration not provided for in the articles of association.
- Accelerated and free depreciation: Certain R&D investments, new assets acquired by small companies, and assets used for R&D activities may qualify for free or accelerated depreciation for tax purposes.
- Dividend exemption: Where the company has received dividends from subsidiaries in which it holds a stake of at least 5%, the Article 21 LIS exemption may apply to prevent double taxation.
- R&D&I tax credits: Research, development and technological innovation activities generate credits against the corporate income tax liability of 25% (R&D), 42% (R&D exceeding the two-year rolling average) and 12% (technological innovation). These credits may be applied or carried forward for up to fifteen years.
Year-End 2024 Checklist
Before 31 December 2024, the company should have completed or initiated:
- Physical stock count and reconciliation with accounting records
- Review of the depreciation schedule and calculation of the year’s depreciation charge
- Provisioning for bad debts, warranties and litigation
- Impairment testing of intangible assets (especially goodwill) and financial investments
- Accruals and deferrals (invoices to receive, prepayments, deferred income)
- Bank reconciliations for all active accounts
- Reconciliation of VAT and withholding tax balances with the returns filed
- Review of related-party transactions and transfer pricing documentation
At BMC we manage the accounting processes of more than 200 companies and coordinate the year-end close with corporate income tax planning. See our operations services.
