The Constitutional Court Upholds the Minimum Instalment Payment

The minimum instalment payment regime in Corporate Income Tax (CIT) applies to all entities whose volume of operations exceeded EUR 10 million in the previous financial year. When filing their instalment payments, these companies are required to calculate a minimum payment of 23% of the positive accounting result (25% in certain regulated sectors). If this amount is higher than the amount under the tax-base method, this amount must be paid, regardless of the outcome of the tax-base method.

This calculation applies both in Form 202 for individual entities and in Form 222 for tax consolidation groups. In both cases, the positive accounting result for the period determines the minimum amount payable, even if the taxable base for tax purposes is lower or there are negative tax bases pending offset. This particularly affects consolidated groups, whose intra-group adjustments can generate significant differences between the combined accounting result and the consolidated taxable base.

This obligation had been the subject of legal debate for years, as it caused very high advance payments, at times far above the final tax for the year. Companies with large off-books adjustments, deductions, extraordinary transactions or marked seasonality have seen these instalment payments weigh directly on their cash flow.

It should be recalled that two questions of unconstitutionality were referred by the High Court of Justice of the Valencian Community (TSJ) by two orders of 6 March 2024 (one for each tax period concerned), and that they were admitted for consideration by the Constitutional Court (TC) by an order of 11 February 2025, as published in the BOE of 17 February 2025. They were raised both because of their economic impact and because a Royal Decree-Law had been used to substantially modify the instalment payment regime. The aim was for the Court to examine whether the compulsory advance payment respected the principle of ability to pay and whether there was a real connection between the accounting result and the final taxable base.

The Constitutional Court, in its Information Note 96/2025, has announced in advance that it dismisses the question of unconstitutionality, confirming that the minimum instalment payment is valid. The detailed reasoning will be known once the full judgment is published, which is still awaiting official release.

According to the information released in advance, the Court considers that instalment payments are obligations “on account” of the tax and do not need to reflect the definitive ability to pay, which will be determined in the annual return. The positive accounting result is regarded as a reasonable and sufficient indicator for advance payments, even if the final tax is subsequently lower because of tax adjustments or pending negative tax bases. On this point, the Court recalls that any excess is regularised in the annual self-assessment.

However, the decision was not unanimous. Some judges have issued dissenting opinions, whose arguments we will learn precisely once the judgment is published. In the absence of the final text, it is anticipated that these dissenting opinions could focus on the proportionality of the system and on the use of a Royal Decree-Law to modify relevant elements of the tax.

In the meantime, the practical consequences for companies are clear: the minimum instalment payment regime remains fully in force, both in Form 202 and in Form 222 (for tax groups). No refunds based on a hypothetical unconstitutionality should be expected. Companies and consolidated groups must continue to apply the 23% minimum in their instalment payments, without changing their calculation method or their financial forecasts.

For individual entities and, especially, for tax consolidation groups, it will be important to review the effect of accounting adjustments on the positive result, to anticipate year-end scenarios and to analyse the impact of extraordinary transactions on instalment payments. In consolidated groups, the accounting result of the whole perimeter can produce advance payments far above the estimated consolidated tax liability, which calls for careful liquidity planning.

At Vicens Advisors, as tax advisers in Mallorca, we help companies and corporate groups to apply Forms 202 and 222 correctly, to analyse the financial impact of these advance payments and to plan their cash flows and tax obligations efficiently, especially in view of this recent decision of the Constitutional Court.

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