taxation in Spain
Investors operating on the Spanish market are required to pay several taxes, as prescribed by the commercial legislation applicable here. The payment of taxes involves both legal entities established on the local market, as well as foreign companies represented in Spain through a permanent establishment. Our team of Spanish company formation representatives can offer assistance on the taxes applicable to companies in Spain and can present in-depth information referring to taxable periods available here.
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Spanish companies are required to pay several taxes, such as the corporate tax and the value added tax. The 25% corporate tax rate is imposed on companies with worldwide income. Spain introduced the minimum corporate tax rate rule on January 1, 2022. Such a rule stipulates that specific entities registered in Spain and with a net turnover of at least EUR 20 million must follow the minimum corporate tax due of 15% applied to the taxable income after specific changes. Besides that, the 23% corporate tax rate applies to companies with a net turnover of less than EUR 1 million per year.
Spanish businesses are also imposed with the business and professional activities tax, which applies to various categories of entities carrying operations in artistic industries. Businessmen should know that this tax can’t be imposed on a higher value than 15% of the taxable profits of the respective entity; our tax advisor in Spain can offer more details on the above-mentioned taxes.
Resident individuals are subject to worldwide taxation on their income produced in Spain while non-residents are only taxed on their income produced in the country. An individual is considered a Spanish resident if he or she spends more than 183 days of the tax year in the country. Spain imposes a progressive personal income tax system. The tax year is generally the calendar year both for individuals and for legal entities. With regard to the taxation of individuals, the following tax rates are available:
We recommend the services offered by our accountants in Spain if you want to open a company in this country. Bookkeeping and payroll are among the essential services and procedures related to accounting, and we can explain in detail what they involve. Also, in order not to run into problems or paperwork errors, we can offer assistance for tax registration. Our tax advisor in Spain can tell you more about this topic.
In Spain, there are certain categories of people exempt from paying social contributions, under certain conditions, as follows:
Therefore, there are certain conditions so that the payment of social contributions in Spain is not mandatory. Our tax consultants in Spain can tell you more if you are a citizen of the European Union living in this country and want to know more about the tax system.
Non-residents with income obtained without a permanent establishment in Spain are subject to the following taxes:
In this case, the provisions of double taxation agreements signed by Spain with the countries in question apply.
Non-resident individuals and companies are taxed only for the income they obtain throughout their business activities in Spain. According to Spanish law, a resident is a person who has been living for more than 183 days in Spain; also, if a person has business activities here, he or she can also be considered a resident. A foreign investor in Spain should know that he or she has the right to choose if the corporate tax will be paid in Spain or in the country of origin. Spain has signed a double taxation treaty with the respective state, but more details in this sense can be offered by our tax advisor in Madrid.
Small and medium-sized companies can benefit from a reduction of the income tax rate. Our specialists in company formation in Spain can provide further information on this tax measure, guided by our tax advisor in Barcelona or in any Spanish city. It must be noted that from the beginning of 2015, all newly incorporated companies benefit from a corporate tax rate of 15%, applicable to the first two years of activity with taxable profits. Our team can help you set up a company in Spain and tell you more about the taxes that must be paid. Feel free to contact our tax advisor in Spain for information.
Companies in Spain that are regulated by the provisions of the commercial legislation are legally required to pay a set of taxes, considering that they are commercial entities incorporated with the purpose of obtaining a profit for the activities they carry on the Spanish territory. All Spanish-incorporated companies have to pay the following taxes:
Investors are invited to watch the next presentation for further details on the tax minimization procedures available in Spain:
Another important tax in Spain is the value added tax (VAT), at the standard rate of 21%. There are reduced rates for certain products and services: 10% for cultural events, hotels, and most drinks and 4% for basic food. Companies that are VAT payers and which are involved in import-export activities must also conclude all the formalities for applying for EORI in Spain.
Businessmen who want to open a company in Spain that will be liable for the payment of the VAT must take the necessary steps in order to register for VAT and to make the VAT returns as per the Spanish tax law. Please note that tax registration is mandatory at the time of company incorporation in Spain taxpayers in this country. Our tax advisor in Barcelona can tell you more in this sense.
Companies in Spain can submit the VAT returns on a monthly or quarterly basis and the system applicable to an entity is based on the company’s turnover. Thus, monthly VAT returns are required for legal entities in Spain that have a turnover of more than EUR 6 million in the previous financial period, while businesses with a turnover below this threshold can select quarterly VAT returns; more information on how a company has to pay the VAT can be obtained from our tax advisor in Madrid.
The procedure has to be completed with the Spanish Tax Agency (Agencia Tributaria), which is the institution in charge of the taxation of various taxable entities in Spain, such as natural persons, legal entities, non-resident companies obtaining taxable income in this country and any other type of entity charged for its income.
We recommend foreign investors to talk to our tax consultants in Spain and find out more about the taxes in this country. We also provide bookkeeping in Spain, therefore, contact us for information about the services we offer.