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Corporate Tax in Spain

Corporate Tax in Spain

Updated on Friday 24th July 2020

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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, so a foreign entrepreneur should be aware on 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 imposed on the company’s income decreased in 2015, from 30% to 28%, and a further decrease was applied in 2016, when the corporate tax was established at 25%. 
 
The rate was even higher in 2005 when it reached 35% and three years later it decreased to 30%. The decrease is a sign that the Spanish authorities want to encourage the business environment in this country, that was strongly affected by the financial crisis. However, at the moment, numerous aspects show that the policies imposed by the local authorities had positive effects, including on the level of employment.  
 
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
 
An important aspect related to the taxation of Spanish businesses is that the newly registered companies may benefit from a lower corporate tax (imposed at the rate of 15%), in the situation in which they were registered after 1st of January 2015. 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

 
The reduced rates applied for small companies were eliminated starting  with 2015, when the new rate came into force. The Spanish authorities decided to allow a transitory period during 2015, when the corporate tax for small and medium-sized companies was of 25%. 
 
The investors are encouraged to open companies in Spain because they will have to pay a reduced corporate tax in the first two years in which they obtain a taxable profit. As mentioned above, the reduced corporate tax for newly formed companies can be imposed at the rate of 15%, for a tax base below EUR 300,000. The reduced tax is available for the first two taxable years of economic activity. Any amount above EUR 300,000 will be imposed with a corporate tax rate of 20% (for the same period of time). 
 

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.  
 

Reduced rates starting 2015
 

One of the most important taxes a company has to pay in Spain is the corporate tax that had a rate of 28% in 2015 and was 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.

 

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). 
 
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). 
 
 
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.