Tax Minimization in SpainUpdated on Monday 18th April 2016
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The foreign entrepreneurs who are performing businesses in Spain should know that there are a few legal methods to minimize the taxes they have to pay to the Spanish public budget. Before applying the minimization method, it is necessary to determine the residency of the foreign investor and its company and if there are certain double taxation treaties signed between Spain and his/her country of residence.
Who can be considered residents in Spain for taxation?
The residents in Spain must pay taxes calculated on their income obtained all over the world and the persons who are non Spanish residents are taxed only for their income gained in this country. The foreign citizens who don’t have the Spanish citizenship, but who live in this country for minimum 183 days or have their main base of professional activities or economic interests in Spain or have a spouse and children who live there, can be considered residents.
The tax residence is necessary in order to prove that a foreign citizen can benefit from the double tax treaties signed between Spain and different other countries. They have to present a residence certificate that is valid for one year.
The non-residents who obtain income in Spain should pay the taxes in this country and if there is a double tax treaty signed between their country and Spain, they have the possibility to choose the country where you will pay the taxes.
Reduced rates starting 2015
One of the most important taxes a company has to pay in Spain is the corporate tax that has a rate of 28% in 2015 and this will be reduced to 25% in 2016 from the 30% in 2014. These changes will encourage the foreign entrepreneurs to invest in Spain in order to benefit from a reduced taxation.
The reduced rates for small and medium-sized companies in Spain were eliminated starting 2015, with certain exceptions, and these types of companies can benefit from the reduced basic rate of income tax. The new companies are allowed to pay an income tax of 15% calculated for the first two years in which they obtain a taxable profit.
For more details about the legal methods of tax minimization, you may contact our attorneys in Spain who offer a wide range of legal services for international clients.