A knowledgeable entrepreneur makes for a successful entrepreneur. Your first priority after having settled in Spain is to get to know the administrative procedures of your new host country but do not forget to get to know the tax system too. Sometimes, the reasoning behind starting a company abroad is due to the business activity type however, more often than this, it is due to tax benefits. This is why we suggest you have an overview of Spanish taxation.
When starting your company in Spain, it is mandatory that its tax domicile and corporate management take place in Spain itself. Your fiscal management therefore will depend on Spain. To qualify for VAT and so charge your customers excluding tax, you will need to rent a room or apartment where at least one employee works. The tax administration services will carry out a check on your business to see if everything is in order and 3 to 4 months later, you will receive your own VAT number.
Having an NIE is essential too for whatever you’re planning to do in Spain. It is also the number that will allow you to do your tax returns.
Once your business has been set up, you will receive a tax identification number called NIF which will serve as a form of identity for the Spanish tax authorities. Here are some key figures to be aware of: - Spanish VAT is 21% and there are two reduced rates at 10% for some everyday products (food, culture, transport etc.) and at 4% (basic food, press, health materials etc.). - Income tax varies between 24% and 52%. You should know that the income tax in Spain is taken directly from the source. This is an advantage for taxpayers who are taxed on all their income. - Corporate tax rate in Spain ranges between 25% and 40% depending on the turnover of the company. Note that it is possible to deduct company taxes through the costs of research and development, the establishment of new branches, professional training, creating more jobs, protecting the environment and the acquisition of commercial vehicles and exports.
The declaration of employer and employee contributions on the salary of the business owner is also interesting. In Spain, anyone with shares in the company cannot become an employee within the company, then they would take the status of manager.