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In this page: Corporate Taxes | Accounting Rules | Consumption Taxes | Individual Taxes | Double Taxation Treaties | Sources of Fiscal Information

 

Corporate Taxes

Tax Base For Resident and Foreign Companies
A company is resident in Spain and subject to corporate income tax on its worldwide income when: it has been incorporated in accordance with Spanish law, its registered office is in Spain, and/or its effective head office is in the country (i.e. when the business activities are managed and controlled from Spain).

If a company is established in a country or territory where no tax is levied or that is a tax haven, such company is deemed resident in Spain for taxation purposes if its core business activity is carried on in Spain or its main assets consist, directly or indirectly, of property located or rights fulfilled or exercised in Spain.

 

Tax Rate

Corporate Income Tax (applies to trading profits, income and capital gains) 25%
Newly created companies for both the first tax period in which they obtain a profit and the following tax period (does not apply to equity companies) 15%
Business and professional activities tax
(local direct tax levied annually on the performance of business, professional, or artistic activities)
Varies according to several factors, and may not exceed 15% of the presumed average profits of the business/professional activity
Fiscally protected cooperatives 20%
Companies operating in Canary Islands Special Zone (ZEC) 4%
Credit institutions 30%
Minimum tax
(from 1 January 2022 - for companies that had a net turnover in the prior year of at least EUR 20 million or that are part of a tax consolidated group)
the lower of:
- 15% of the taxable base, or
-  the amount resulting after deducting certain tax credits established to promote investments by port authorities and foreign tax credits from 25% of the taxable base
 
Tax Rate For Foreign Companies
Resident companies, which are companies incorporated in Spain, registered in Spain or effectively managed in the country, are taxed on worldwide income and capital gains. Non-resident companies are taxed only on Spanish-source income and capital gains. For permanent establishments in Spain of foreign companies, non-resident income tax is chargeable on income that may be allocated to the permanent establishments at a 25% tax rate.
Capital Gains Taxation

Capital gains are usually included in taxable income and are taxed at the standard rate of corporate income tax (25%). 95% of capital gains are exempt from tax if a participation of at least 5% in the subsidiary is held for a one-year period before the disposal of shares, resulting in an effective tax rate of 1.25%. Until 1 January 2021, the 5% requirement was deemed to be met if the participation in the subsidiary exceeded EUR 20 million, but this rule no longer applies. Nevertheless, in fiscal years 2021 through 2025, taxpayers with shareholdings acquired before 2021 that had an acquisition value of over EUR 20 million but that do not meet the shareholding percentage of 5% may continue to apply the full exemption for dividends and capital gains (provided that the general requirements are met).

Main Allowable Deductions and Tax Credits
Business expenses are generally deductible if incurred for the purpose of earning profit, are properly recorded and documented, and provided that a particular deductibility restriction or limitation does not apply. Payments of real property tax and local surcharges on these taxes are deductible in determining the corporate tax base. All salaries, wages and bonuses paid generally are deductible, as well as severance pay (this last one up to a limit of EUR 1 million/employee). Donations are non-deductible expenses for corporate income tax purposes; however, a tax credit of up to 35% of the donation may be availed for donations to non-profit organisations that comply with certain requirements. Bad debts are deductible, provided certain conditions are met.
Net operating losses may be carried forward indefinitely (capped at 70% of taxable income obtained before the request to carry forward, 50% for taxpayers with a turnover between EUR 20 million and 60 million in the 12 months preceding the request, 25% for companies with a turnover over EUR 60 million in the 12 months preceding the request - no cap applies to companies with net operating losses below EUR 1 million). The carryback of losses is not allowed.

Tax incentives are provided for R&D (25%, or 42% if the expenses are higher than the average R&D expenses incurred by the company during the previous two years) and technological innovation of existing products (12% of the costs). An additional tax credit of 17% can be availed of for staff expenses incurred for staff exclusively carrying out and qualified to carry out R&D activities. Special tax treatment is also given to venture capital companies and funds.

Other Corporate Taxes
A 1% capital duty tax is levied on capital reductions and company dissolution, and is payable by the shareholders. Payroll tax, real property tax (with rates depending on the region and the property value) and stamp duty (0.5% for all notarized document, ranges from 0.75% to 1.5% for other transactions depending on the region and the type of transaction) also apply. A hydrocarbons tax relating to the exploration, research and exploitation of hydrocarbons is also in force.

A transfer tax, ranging from 5% to 11%, depending upon the region (6% on average), is generally levied on inter vivos transfers, including real estate transfers and real estate leases that are exempt from VAT. Transfers of shares generally are exempt from transfer tax.

Companies resident in a tax haven for tax purposes that own real estate or hold real property rights in Spain are subject to a tax equal to 3% of the assessed value of the real estate.

The employer contributes 29.9% of the employee’s wages for social security (23.6% for common contingencies, 5.5% for unemployment, 0.2% for the salary guarantee fund, and 0.6% for professional training), plus a contribution for professional contingencies ranging between 1.5% and 7.15%, depending on the type of activity.

Other taxes include: real estate tax (levied annually by the local authorities), a local tax levied on the increase in the value of urban land (applied at the time of the sale of the urban real estate), a motor vehicle tax, waste collection fees.

Other Domestic Resources
Spanish Tax Agency
Consult Doing Business Website, to obtain a summary of the taxes and mandatory contributions.
 

Country Comparison For Corporate Taxation

  Spain OECD United States Germany
Number of Payments of Taxes per Year 9.0 10.1 10.6 9.0
Time Taken For Administrative Formalities (Hours) 143.0 163.6 175.0 218.0
Total Share of Taxes (% of Profit) 47.0 41.6 36.6 48.8

Source: Doing Business - Latest available data.

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Accounting Rules

 

Accounting System

Accounting Standards
Financial statements must be prepared in accordance with IFRS Standards. Accounting in Spain is based on the General Accounting Plan (in full compliance with IFRS).
Accounting Regulation Bodies
ICAC, Institute of Accounting and Auditing
Accounting Law
Law 16/2007 of 5 July 2007 (and its partial modification by Law 34/2007 of 15 November 2007) reconstitutes and adapts the mercantile legislation related to accounting and modifies, among other things, the Commercial Law and the recasting of the text of the Limited Company (Listed Company or Public Limited Company) Law. The primary modifications concern the annual accounting reports, the evaluation criteria of certain items and the financial consolidation system.
Difference Between National and International Standards (IAS/IFRS)
IFRS Standards are required for all domestic public companies and listings by foreign companies (except in the case of a foreign company whose home jurisdiction’s standards are deemed by the EU to be equivalent to the IFRS Standards). IFRSs are not required for SMEs.
 

Accounting Practices

Tax Year
Calendar year, but can be otherwise established. Must not exceed 12 months.
Accounting Reports
The annual accounts consist of the balance sheet, income statement, (cuenta de perdidas y ganancias), statement of changes in net assets, cash flow statement and the schedule (memoria). Summary annual accounts can be used under certain conditions of amount and staff for the SME and micro-enterprises.

Under Spanish law, if two of the following requirements are met in two consecutive years, the company may avoid audit of its annual accounts: total assets are less than EUR 2.85 million; annual turnover is less than EUR 5.7 million; and the workforce comprises fewer than 50 employees.

Publication Requirements
The publication of accounts to regulatory authorities is annual and compulsory. The directors of a company have a three-month period after the close of the fiscal year to prepare the accounts.
 

Accountancy Profession

Accountants
The profession is highly developed due to the complexity of the law and the administrative paperwork.

The accountant (censor jurado de cuentas) certifies, verifies, assesses and organizes the company's accounting books and balance sheet.

Auditors
are also numerous.
Professional Accountancy Bodies
ICJCE, Institute of Certified Public Accountants of Spain
AECE, Professional Association of Certified Public Accountants and Certified Tax Experts of Spain
AECA, Spanish Association of Company Accounting and Administration
Member of the International Federation of Accountants (IFAC)
Spain is an active member of the IFAC.
Member of Other Federation of Accountants
Spain is a member of the Federation of European Accountants (Accountancy Europe).
Audit Bodies
Companies have to seek a statutory auditor to conduct an annual audit of the financial health of their organisation. You can consult the Group of Public Auditors of Spain
 
 

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Consumption Taxes

Nature of the Tax
Impuesto sobre el Valor Añadido (IVA) (Value-added tax - VAT)
Standard Rate
21%
Reduced Tax Rate
For certain basic goods and services, a reduced VAT of 10% (e.g. food and drink for human or animal consumption; pharmaceutical products for animals; prescription glasses and contact lenses; certain medical equipment; residential dwellings; passenger transport; hotel and restaurant service; garbage collection; trade fairs and exhibitions; cinema tickets; cultural live shows/entertainment) or 4% (e.g. basic foodstuffs; books, journals and magazines; pharmaceutical products for humans; certain goods and services for handicapped persons) applies.
Due to COVID-19, the supply of sanitary products, COVID-19 tests and COVID-19 vaccines will be VAT zero-rated until December 2022.

Exports and international services provided to non-EU countries are zero-rated.

Exclusion From Taxation
Exports and services connected to exports, immovable property (in certain cases); medical services; finance; insurance; universal postal services are exempted from VAT.
Method of Calculation, Declaration and Settlement
VAT is applied to the supply of taxable goods and services. Registration is required for all businesses operating in Spain. Foreign companies selling goods in the Spanish market via the internet do not need to register for VAT if their annual turnover is below EUR 10,000.

Filing and payment are due quarterly, unless the turnover in the previous period exceeds approximately EUR 6,010,121.04, in which case they are due on a monthly basis through the electronic VAT reporting system.

Other Consumption Taxes
Excise duties are chargeable on most hydrocarbon oil products, alcoholic drinks, and tobacco products.

Special Tax on Certain Means of Transport (IEDMT) is required when registering a motor vehicle.

The transfer of real estate is also subject to a VAT of 21%, with a reduced rate for private residential property (10%) and individuals not in the VAT system (6% transfer tax).
In the Canary Islands, a specific tax is applied en lieu of VAT (Canary Island General Indirect Tax - IGIC), at a standard rate of 7% (other rates are 0%, 3%, 9.5%, 15% and 20%). In Ceuta and Melilla, a sales tax is applied instead of VAT.

A gift and inheritance tax is levied on the assets' net acquisition value with progressive rates (which may vary according to the region, generally between 7.65% and 34%). A tax is applied on gaming income.

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Individual Taxes

Tax Base For Residents and Non-Residents
Resident individuals, who spend more than 183 days of the tax year in Spain or with a main professional or business base in Spain ("centre of activities"), are taxed on worldwide income. Non-resident individuals are taxed only on Spanish-source income at a different rate (deductible in the country of origin if a non-double taxation convention is signed).
 

Tax Rate

Tax Base Progressive rates from 9.5% to 22.5%
Please note that the local rate resulting from the table approved by the relevant Spanish region must be applied, so the final tax rates may in practice vary according to the region where the individual is resident.
From EUR 0 to 12,450 9.5% (+9.5% local tax)
From EUR 12,450 to 20,200 12% (+12% local tax)
From EUR 20,200 to 35,200 15% (+15% local tax)
From EUR 35,200 to 60,000 18.5% (+18.5% local tax)
From EUR 60,000 to 300,000 22.5% (+22.5% local tax)
Above EUR 300,000 23.5% (+23.5% local tax)
Savings tax A 19% tax is levied on savings income up to EUR 6,000; 21% on savings income between EUR 6,000 and EUR 50,000; 23% on savings income up to EUR 200,000; and 26% on savings income above EUR 200,000
Wealth tax (on the assets held by the taxpayer as of 31 December) Progressive rates from 0.2% to 3.5% (may vary according to the regional governments' regulations).
 
Allowable Deductions and Tax Credits
Deductions are available for mandatory social security contributions, union fees (up to EUR 500), mandatory contributions to mutual benefit societies, and "other expenses" (capped at EUR 2,000, which may be higher for those working in a different town). Alimony paid to an ex-spouse in accordance with a court decision is deductible. Contributions to qualifying pension plans can be deducted up to a maximum of EUR 1,500 per year, capped at 30% of total individual net income from employment and business activities (the limit can be increased by EUR 8,500 when it comes from business contributions). Furthermore, individuals whose spouses obtain income from employment or business activities up to EUR 8,000 can deduct the contributions made to qualifying pension plans from their own taxable income on behalf of the spouse (capped at EUR 1,000/year).

Several allowances are provided by the law for individuals (EUR 5,550, raised to EUR 6,700 for over 65s and to EUR 8,100 for over 75s) and families (varying according to the composition of the family). A minimum family allowance for disability of relatives in an ascending and descending line of EUR 3,000 for each relative or EUR 9,000 when the level of disability is 65% or more also applies.

The expenses incurred to realise a business income can generally be deducted. Several reductions apply to the net business income.
Capital losses arising from transfers of assets are included in savings income and can only be offset against capital gains included in the savings income of the tax period.
For further information, visit the dedicated pages on the website of the Spanish Tax Authority.

Special Expatriate Tax Regime
Non-resident individuals are taxed at a flat rate of 24% on the gross amount of the income (i.e. no deductions or allowances are granted). For residents in other EU member states or European Economic Area (EEA) countries with which there is an effective exchange of tax information, the rate is 19%. Pensions are taxed at progressive rates between 8% and 40%. Capital gains, interest and dividends are taxed at 19%, royalties at 24%.
A foreign individual who is assigned to work and live in Spain may opt to be taxed as a non-resident for a six-year period.

The income tax is not levied on employment income obtained by tax resident individuals if the work is effectively carried out outside Spain and if the work is carried out for a company, entity or permanent establishment which is not resident in Spain for tax purposes and a similar tax is levied in the country where the employee carries out the work (up to the limit of EUR 60,100).

Capital Tax Rate
For non-residents, capital gains generated from transfers of assets are taxed at a 19% rate.
A gift and inheritance tax is levied on the assets' net acquisition value with progressive rates (which may vary according to the region, generally between 7.65% and 34%).
A property tax is also levied. Rates can be fixed by each municipality, generally with a minimum of 0.4% (for urban properties) to a maximum of 1.3% (for special properties).

For 2022, employees' social security contribution amount to 6.35% of the salary (4.70% for common contingencies, 1.55% for unemployment, and 0.10% for professional training), with a maximum contribution base of EUR 4,070.10 per month.

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Double Taxation Treaties

Countries With Whom a Double Taxation Treaty Have Been Signed
List of double taxation agreements signed by Spain
Withholding Taxes
Dividends: 19%; Interest: 19%; Royalties: 0 (if qualified as business income, when paid to resident companies)/19% for residents of the EU/EEA and 24% for all other non-residents, unless otherwise provided in a tax treaty.

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Latest Update: November 2022