ICEX-INVEST IN SPAIN

FAQ's

Tax System

How is corporate income tax applied, what are the rates and what deductions are there?

    Corporate income tax is levied on the income of companies resident in Spain. Companies are considered to be resident in Spain when:

    a) They were constituted under Spanish law.
    b) Their registered office is in Spain.
    c) Their effective management HQ is in Spain. The effective management HQ is considered to be in Spain when the management of the company and control of its activities are based in Spain.

    In the event of any conflict of residence status, the provisions of the relevant double taxation agreement signed by Spain and the other countries involved apply.
    The tax base for corporate income tax is calculated by applying the adjustments provided for in tax law to accounting income.
    The general tax rate is 25%.  For newly created companies, a special corporate income tax rate of 15% is applied in the first two years in which they make profits. Corporate income tax legislation provides for a number of deductions, seeking to avoid double taxation and to foster research, development and innovation.
    The permanent establishments of non-resident entities pay non-resident income tax, the regulations for which, with some exceptions, are subject to corporate income tax regulations. In practice, the result is that the companies and permanent establishments of non-resident entities are subject to almost identical tax treatment.

    What are ETVEs and how are they taxed?
    ETVEs (Entidades de Tenencia de Valores Extranjeros - Foreign Securities Holding Companies) are subject to a special tax regime, which may be requested by companies established in Spain with the corporate purpose of managing and administering securities representing the shareholders' funds of non-resident entities in Spain. In other words, this is a tax regime for Spanish holding companies. This special tax treatment seeks to achieve tax neutrality on profits from investments in foreign companies. However, this tax treatment must be applied for in writing to the Ministry of Finance. More information


Last updated: 17|03|2016

How will VAT affect my company if I set up in Spain?

    VAT is a tax charged on final consumption so that, as a general rule, and except in the case of exempt activities, it is neutral for businesses and professionals: in other words, the cost is paid by the final consumer, and does not, in principle, represent a cost for businesses or professionals.
    However, some administration costs may arise from complying with these tax obligations, as companies are the tax payer, and are obliged to charge the tax to the final consumer and pass it on to the public coffers.
    Therefore, companies pay VAT on their purchases, and charge this when they deliver their goods or services. In this regard, the VAT paid is recovered by subtracting it from the VAT collected
    The standard rate of VAT is currently 21%, although there are reduced rates for certain goods.

    More information

     


Last updated: 17|03|2016

What are the main taxes on companies in Spain?

    The taxes applicable to companies vary over their lifecycle. However, without prejudice to any others that might apply, the main taxes are:

    • Company foundation and constitution. All transactions for creating, capitalizing and maintaining companies are exempt from Capital Transfer Tax and Stamp Duty on corporate transactions. More information
    • Business activity. VAT is particularly important as an indirect tax, and corporate income tax and non-resident income tax are particularly important as direct taxes. These include:

    Non-Resident Income Tax This is a tax on the income generated in Spain by non-resident physical or legal persons. It should be noted that the tax treatment differs depending on whether the activity is performed through a permanent establishment or not. More information

    Personal Income Tax This is a tax, among other things, on the income of individuals who are resident in Spain. The usual income subject to this tax is income from employment (for which companies are obliged to make tax withholdings on the income paid to their employees), income from movable property and real estate assets, capital gains, and income from business and professional activities.
    This tax is currently applied progressively. The minimum rate is 19%, rising to a general maximum of 45%, although this rate is higher in some Autonomous Communities.

    Income from savings are taxed using the following scale::

    Savings tax base (up to euros) Gross tax charge (euros) Remaining savings tax base (up to euros) Applicable rate (percentage)

    0

    0

    6,000

    19

    6,000

    1,140

    44,000

    21

    50,000

    10,380

    And over

    23

     More information

    Local and autonomous community tax A number of taxes are levied by local authorities and autonomous communities. The impact of these depends on the company's activity.
     

     


Last updated: 17|03|2016

Contact us
91 503 58 08


Búsqueda de ayudas e incentivos

The best information by region, by sector and daily updated. No registration needed!

Search now


ICEX-INVEST IN SPAIN
Paseo de la Castellana 278, 2nd Floor 28046 Madrid SPAIN
T (+34) 91 503 5800
investinspain@investinspain.org
www.investinspain.org

Home | Legal warning | Site Map | Accessibility

INVEST IN SPAIN - Paseo de la Castellana, 278 - 28046 Madrid

Level Double-A conformance icon, W3C-WAI Web Content Accessibility Guidelines 1.0

2015 ICEX - Invest in Spain