Corporate Tax in Spain: Financial Advice for Foreign Investors

Updated on Wednesday 09th August 2023

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Corporate Tax in Spain

One of the most important taxes which have to be paid by the local and the foreign investors who open companies in Spain is the corporate tax, that is applied on the federal level. There are also other less important taxes that are levied by the regional authorities in this country. A foreign entrepreneur should be aware of the requirements of these two levels of taxation – at the federal and at the regional level.

Our team of lawyers in Spain can offer in-depth advice on the corporate taxes applicable to all commercial companies operating in this country; at the same time, businessmen can receive assistance on the manner in which such taxes have to be paid.

Standard corporate tax in Spain

The good news for both local and foreign companies operating in Spain is that the rate at which the corporate tax is now 25%, but there are special reduced rates for certain businesses. Our attorneys in Spain will explain more about the corporate tax and the recent changes.

Starting from January 1, 2023, smaller companies with a turnover of less than 1 million euros have a reduced corporate tax rate of 23%.

For newly established companies, there's a special reduced corporate tax rate in Spain of 15% that applies to their first profitable year and the following year. This lower rate helps new businesses get started and encourages growth.

However, hydrocarbon companies, meaning companies involved in the oil and gas industry, and credit institutions, for example, banks, have a higher corporate tax rate of 30%. If your company is involved in this sector, we recommend reaching out to our tax lawyers in Spain for guidance.

This tax is applied to all companies registered in Spain and it is calculated on the net income obtained from the economic activity during a business year. The corporate tax represents an important source of income for the public budget of the Spanish authorities.

Starting from January 1, 2022, there was also introduced a minimum corporate tax in Spain for certain companies. Our team of Spanish lawyers can offer more details on other requirements available for this particular case.

Different rates for certain types of Spanish companies

As mentioned above, newly-established companies, with profit in their first two years will be taxed at a rate of 15%. However, there are some exceptions this corporate tax rate does not apply to these companies. For example, if the company took over an existing business from related individuals or entities. Our Spanish lawyers can explain if these conditions apply to your company.

Different rates apply to other types of companies as well. Cooperative societies protected by tax regulations will be taxed at 20%, except for certain profits. Non-profit entities will be taxed at a 10% corporate tax rate in Spain. Mortgage market regulation funds and pension funds will have a 0% tax rate. Credit institutions, hydrocarbon exploration companies, and certain entities in the Canary Islands Special Zone will be taxed at 30% or special rates, as determined by specific laws.

The investors are encouraged to open companies in Spain because they will have to pay a reduced corporate tax in the first profitable year and the following year for newly established companies. Please contact our law firm in Spain for more details regarding company formation.

What are the basic categories of Spanish taxpayers?

The residents in Spain must pay taxes calculated on their income obtained at a global level 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 one will pay the taxes.

We offer services in all parts of Spain, so feel free to contact our tax lawyers in Barcelona for any problem. Also, do not hesitate to contact our real estate lawyers in Spain if you have any issues related to the subject.

Reduced rates starting 2023

This lower corporate tax rate in Spain can make the country more attractive for foreign investors and businesses looking to establish operations. It also creates a supportive environment for small businesses and encourages employment in the country.

Entrepreneurs looking to take advantage of this opportunity to create their own small business in Spanish cities can contact our tax lawyers in Barcelona.

What are the basic corporate taxes in Spain?

Corporate taxes refer to the ensemble of taxes that have to be paid by companies operating in Spain. Our Spanish lawyers can present in-depth information on all the taxes applicable to local businesses and can provide in-depth information on the tax compliance system applicable in this country. Currently, the following taxes are available:

the corporate income tax, which is imposed at the standard rate of 25%;
companies operating as branch offices are charged with the branch tax, currently imposed at a rate of 25%;
companies can also be imposed with the capital gains tax, that can be charged at a rate of 25% or 0%;
all companies in Spain that are liable to the payment of the corporate income tax have to submit their tax return in a period of maximum 6 months and 25 days after the end of the fiscal year;
please be aware that taxes paid after the end of the prescribed tax return period will be charged with fines that can range between 50% and 150%, calculated from the value of the unpaid tax liability.

When an investor registers a local business, he or she should take all the necessary measures in order to register for taxation purposes as well. One must also register for the payment of the corporate tax, by submitting specific forms with the Spanish Tax Authority (Agencia Tributaria).

Investors must be aware of the fact that the Spanish corporate tax system also includes the capital duty tax and the payroll tax. One should also take into consideration the real property tax and the stamp duty. Additional taxes may also apply and you may request legal advice on the Spanish tax system from our team of lawyers in Spain.

What types of entities are liable to paying the Spanish corporate tax?

A wide range of entities have to register and to pay the corporate tax in Spain. The amount due is determined based on the tax residency of the respective entity (Spanish based company or foreign based company, but which has its registered office in Spain or its effective management set up here).

Our Spanish law firm can present the extensive list of entities that must be registered for paying this type of tax and, below, investors can find some of the most common situations in which various structures have to pay this type of tax:

companies incorporated following the commercial legislation in Spain, such as limited liability companies, corporations or partnerships;
government entities and associations, organizations, foundations and other similar structures, regardless if they are registered as private or public structures;
sole traders must also pay this tax, as it is the case of economic interest groupings;
certain categories of investment funds are liable as well, such as the guaranteed investment funds or the investment funds regulated by the Collective Investment Institutions Act;
this applies to cooperatives and to European economic interest groupings.

What are the obligations for filing the corporate tax return in Spain?

Companies must file their corporate tax returns as stipulated by the applicable accounting standards. Provided that an entity, regardless of its type, is liable to the payment of this tax, then, its representatives have to file the corporate tax returns as per the applicable requirements.

According to the Spanish law, a company liable to the corporate tax has to file the tax returns regardless if has obtained taxable income in the respective tax period or not. The Spanish Corporation Act prescribes the obligations of the taxpayers, but more details on this subject can also be obtained from our team of Spanish lawyers.

However, there are specific exemptions from this basic rule, where taxpayers do not have to file tax returns, as long as they comply with the regulations stated by the Articles 9.1 and 9.3 of the Spanish Corporation Act (the latter Article refers to entities that have an income of maximum EUR 73,000 in a financial year). For more details, seek guidance with our tax lawyers in Spain.

The amount due that a company has to pay is calculated based on the provisions of the Corporate Income Tax Act, which stipulates that the basic computing method is established by the Spanish Generally Accepted Accounting Principles. The Act also provides the legal basis through which companies can benefit from deductions from the payment of this tax and they may obtained when investing in research and development activities, provided that certain conditions are met (the expenses and investments are made in Spain, in the European Union’s states or in the European Economic Area).

Why choose our tax lawyers in Spain?

Tax laws and regulations can be complex and subject to frequent changes. Our tax lawyers in Spain have in-depth knowledge and expertise in this field. They can provide you with accurate and up-to-date guidance, ensuring compliance with applicable tax laws. Since the corporate taxes in Spain have changed in the recent years, hiring a tax lawyer can be helpful to make sure you interpret and apply the tax laws accurately to your business.

Our tax lawyers in Barcelona can assist in developing effective tax planning strategies to optimize your tax position. Contact us to discover the incentives that apply to your business, helping to minimize tax liabilities while remaining compliant with legal requirements.

If you have issues with tax disputes or audits, our tax lawyers can provide valuable assistance. They can represent your interests, communicate with tax authorities on your behalf, and help resolve any disputes or disagreements that may arise.

We also provide assistance with inheritance taxes. The nominal tax rate is 34%, but it can double to 68% if a non-blood relative inherits Spanish assets. It's important to comply with inheritance tax obligations, and seeking guidance from a tax lawyer in Spain can help with inheritance tax planning and understanding the tax implications.

Investors who need to find out more about the corporate tax applicable in Spain are invited to contact our law firm in Spain. Our Spanish lawyers will offer information about the taxation system in this country and legal assistance for any other topic related to the economic activity of company registered here. Please address to our team of lawyers in Spain for more information on how to register for the payment of the corporate income tax.