Guide: Company Tax Return For Your Schengen Visa Application
What Is A Company Tax Return For Your Schengen Visa?
A ‘Company Tax Return’ is an official form you must fill in to report your company’s earnings, losses, loans, etc. The form has the purpose of calculating the amount of tax your company owes to the government of your country of residence.
Most of the time, the form has to be submitted to a state or local tax agency.
For most countries, the company tax return’s main purpose is to calculate the corporate income tax (CIT) or business tax, which is the tax imposed on a company’s net income.
There are two types of tax returns:
1. Personal Income Tax Return (ITR) for individuals only (individuals within the jurisdiction of most countries use them to declare their income and calculate the percentage at which they are taxed).
2. Company Tax Return for companies only (this guide).
Typically, both individuals and companies are required to submit the tax return annually. However, some countries’ governments may also require the tax return to be filled out and submitted once every six months (or another set period).
If you own a company, submitting your company’s tax return for the last 3 years to the Embassy/Consulate/Visa Application Centre is a mandatory Visa requirement in order to be able to travel to the Schengen Territory.
However, if you have been running your company for more than 3 years, we strongly recommend you submit your company’s tax return for the last 5 or 6 years.
Important – If you own a company in your country of residence, you must submit both your company tax return and personal income tax return (ITR).
If you are not a citizen of the country where you are running your business, you must also provide a copy of your residence permit and/or work permit (if applicable).
The Importance Of The Company Tax Return For Your Schengen Visa
When applying for a short stay Visa for travelling to the Schengen Region (no matter the Visa type you are applying for – e.g., Schengen Tourist Visa, business visa, etc.), showing proof of your employment status is mandatory.
Your company tax return is important for the same main reason as for why your personal income tax return (ITR) is important:
- It shows proof of your rootedness (because you have a stable job in your country of residence)
Employment/job stability is one of the most common ways to prove an applicant’s rootedness and intentions to return from the Schengen country they will be travelling to.
Having a stable job means getting income and paying state income taxes. In most countries, citizens who pay taxes are allowed to access a wider range of benefits than citizens who do not pay them – e.g., retirement savings contributions, bank loan eligibility, etc.
If you run your own company, this rule does not change. A company that takes responsibility for tax laws and regulations will offer you a more stable work environment than a company that does not fulfill its legal obligations.
Proving your rootedness is important because the Visa officers need to ensure you return to your country of citizenship or residence and will not stay in the Schengen Area illegally.
However, for the Visa officers, your company tax return has also another purpose:
- It brings proof that you run a legal company that generates revenue
The Visa officers must be sure that the information you provide when applying for your Schengen Visa is 100% genuine and corresponds to reality.
Therefore, they need to check your company’s documents to ensure that you legally run your business in your country of residence and your business generates revenue.
For example, you can own a company that has no activity and generates no cash flow. Or your business can operate at a loss and be at risk. From the Visa officers’ perspective, a business with no activity or is losing money cannot indicate your rootedness or a stable income source. Thus, your company tax return brings proof that you can generate profit as a business owner.
According to the Schengen Visa requirements, you must show proof of sufficient funds to cover your expenses for your trip to the Schengen Zone (e.g., flight itinerary, travel insurance, hotel reservations, day-to-day expenses, etc.). For this reason, you must prove that your company is generating enough revenue.
How To Get A Company Tax Return For Your Schengen Visa
In most countries, you can get a copy of your company tax return from the government tax authority’s official online portal, where you must submit the form. You should have an online business account that you can use to submit your company tax return at specific intervals and download the company tax return for the current year – if available – or for the previous years).
However, in some countries, you can also fill in the form by hand and submit it at the government tax authority counter.
According to the laws in your country of residence, you may need to submit both your company tax return and personal income tax return to the same government tax authority. Or, you can submit them to different tax authorities.
As a business owner, you should already have a copy of each company tax return you submitted from the moment you registered and started running your company. Still, in case you lost or misplaced them, you can request new copies.
If you submitted your tax return through the tax agency’s online portal, it is highly likely that you can download a new copy by logging in to your business account and following some specific steps. Or, if you submitted your company tax return at the counter of the government tax authority, you may need to book an appointment and make an in-person request over the counter.
Common Mistakes To Avoid When Submitting Your Company Tax Return For Your Schengen Visa
When you submit your company’s tax return for your Schengen Visa application, make sure you avoid making the following mistakes:
- Submitting a tax return that shows your company does not produce enough revenue or is operating at a loss
This is one of the most significant errors you can make when submitting your company tax return. Your main goal as a Schengen Visa applicant is to prove that you have strong ties in your country of residence and enough means of subsistence to cover your expenses during your trip to a Schengen State.
A company that does not produce enough revenue or is operating at a loss can prove neither your rootedness nor financial sufficiency.
- Information on your tax return does not match the information on your business and personal bank statements
As a business owner, you should know that you must not mix business and personal finances. For this reason, you should keep separate accounts for business and personal expenses. We strongly recommend you submit your business bank statements and personal bank statements as separate required documents. The information on your business and personal bank statements should match the information on your tax return.
Sometimes, business owners are trying to avoid paying the full amount of taxes they owe. As we have mentioned a few times in our previous guides, the Visa officers are not tax agents. Their duty is to ensure you have genuine intentions to return to your country of residence and not judge you for under-reporting or omitting income.
Also, it might be difficult for them to spot an attempt to omit income (unless you are not transferring the omitted income from your business account to your personal account – they could easily notice these transactions by checking both your business and personal bank statements. Or, the salary you get from your own business, as shown by your personal bank statements, does not match the salary you get as indicated by your company tax return).
Of course, all of the information on your documents should match. But if you are under-reporting or omitting income and your bank statements can reveal these details, you can still apply for a Schengen Visa. Just be ready to prove to the Visa officers that you have genuine intentions to return to your country of residence.
Note: Make sure that your personal details on all of your documents match as well – Your details on your company tax return, bank statements, etc., must match your details on your valid passport, Visa application form, etc.
- Submitting a tax return that shows you have a high amount of penalties
You have to pay penalties most of the time if you do not file your company tax return by the deadline or do not deposit taxes on time. If your government tax agency has charged you with a small amount of money as a penalty for underpayment or late payment, this should not be a problem for the Visa officers.
But if you show them that you have a high amount of penalties because your tax return was more than 6 months late, this might raise some red flags. The Visa officers may believe that you are not a trustworthy person who takes responsibilities seriously.