The taxation regime in Spain has been changed starting with 2015 and the rates of major taxes decreased by a few percentages for the benefit of the local and the foreign investors who are encouraged to do business in this country, that was strongly affected by the financial crisis, but finally has recovered in the last few years.
However, the measures imposed by the Spanish government
in the last years have already proven to be effective on various matters, including employment
, which registered record level
in the first half of 2017. Our team of lawyers in Spain
can provide in-depth information on the Spanish taxation regime
applicable to foreign entities operating in this country.
One of the most important taxes applicable to foreign investors is the dividend tax, which was imposed at rates between 21% and 27% in 2014 and between 20% and 24% at the level of 2015.
Starting with 2016, the Spanish authorities apply a dividend tax imposed at rates between 19% and 23%, depending on the taxable amount. Sums of money below EUR 6,000 are imposed with a tax of 19%, while values above EUR 50,000 will be taxed at a rate of 23%.
Exemption removed starting 2015
Another important change is the removal of the exemption on the first EUR 1,500 of dividends.
The foreign entrepreneurs who obtain dividends in Spain, but not through a permanent establishment in this country, are required to pay the dividend tax applicable at the rate of 19% starting with 2016. They were entitled to a refund of the dividend tax for the first EUR 1,500 of their dividends, measure that was applied in the last years, according to Spanish Non-Resident Income Tax Law.
The tax reform
that came into force in January 2015
was proposed by the Spanish government
in 2014, approved and then published in the Official Gazette in November 2014
. The reform included the decrease of important taxes
, such as dividend and corporate tax
, and other major changes for the personal income tax
of residents and non-residents
, as well as for the value added tax (VAT)
Dividend exemption in Spain
Foreign companies operating in Spain
can benefit from a tax exemption on dividends and capital gains
if certain conditions are met. Foreign subsidiaries
are entitled to this benefit if the parent company holds at least 5%
of the subsidiary’s ownership
for a period of minimum one year. However, the regulation is applicable as long as the parent company
owns at least EUR 20 million in the respective holding.
It is also necessary for the foreign subsidiary
to be imposed with a similar corporate income tax
as the one applicable under the Spanish legislation
Foreigners who want to find out more details on the taxation system
applicable to legal entities and natural persons are invited to contact our law firm in Spain