Spain’s corporate tax system is designed to be straightforward and transparent, ensuring that businesses can easily comprehend their tax obligations. In this blog, we will present the key aspects of corporate taxation in Spain:
Corporate Income Tax (CIT):
- Standard Rate: The general CIT rate in Spain is 25%.
- Reduced Rates:
- Small and Medium Enterprises (SMEs): Companies with a turnover of less than €1 million benefit from a reduced tax rate of 23%.
- Newly Established Companies: Start-ups enjoy a tax rate of 15% for the first two profitable fiscal years.
Taxable Income:
- Resident Companies: Subject to tax on their worldwide income.
- Non-Resident Companies: Taxed only on income sourced within Spain.
Tax Deductions and Credits:
- Allowable Deductions: Expenses that are necessary and directly related to business activities are deductible.
- Non-Deductible Expenses: Items such as dividends, fines, and penalties are not deductible.
Tax Filing and Payment:
- Annual Tax Return: Companies must file their CIT return within 25 calendar days following the six months after the end of the tax year.
- Advance Payments: Typically made in April, October, and December, based on the previous year’s tax liability.
Recent Developments:
- Minimum Tax Rate: Effective from January 1, 2022, certain entities with a net turnover of at least €20 million are required to pay a minimum corporate tax of 15% on their taxable income.
- Additional Tax on Large Companies: In November 2024, the Spanish parliament approved an additional tax on large companies with revenues exceeding €750 million, ensuring they pay at least 15% of their consolidated profits.
To learn more about Spain’s tax laws, please consult the following official sources: investinspain.org and Ministry of Finance (Ministerio de Hacienda y Función Pública)
Tax Incentives:
- Research and Development (R&D) Credits: Companies investing in R&D can benefit from tax credits, reducing their overall tax burden.
- Patent Box Regime: Income derived from qualifying intellectual property can be partially exempt from taxation, encouraging innovation.
Conclusion:
Spain’s corporate tax system is structured to be clear and equitable, with provisions that support business growth and innovation. By understanding these key elements, companies can navigate their tax obligations effectively and benefit from available incentives.
At Internago, we specialize in assisting businesses with their international market expansion, guiding you through every tax and compliance challenge. Whether you are entering Spain or another European market, let us manage the complexities so you can focus on growth and success.
Be sure to also check out our other blogs about Spain, such as The cost of employing in Spain and Registering as a foreign employer in Spain
For more information, contact us at info@internago.com or visit our Payroll Portal.