Tax on companies in Spain

The Spanish tax system is, as we have seen, more flexible and more advantageous than some other European systems. Corporate tax is no exception to this rule and offers more than favourable rates for small and medium sized enterprises.

Who is affected by this tax for companies?

Several different tax returns exist in Spain. This company tax does not apply to the self-employed, it applies to all companies that have their tax or social residence in Spain or that were directly created there.

The Spanish government, who are trying to encourage foreigners to invest in the country, has made significant efforts to simplify the tax legislation for companies. Enterprises based in Spain will therefore be taxed on all their worldwide income, including investments, social benefits and transfers.

It is mandatory to bear in mind all treaties to avoid double taxation from both Spain and any other countries that could affect your tax base in Spain.

Company Tax Returns in Spain

The taxable period for corporation tax corresponds to the accounting year of the company. The basic documentation needed for the annual returns are the company's financial statements and accounting records. Annual returns must be filed along with the tax paid within 25 days after the six months after the end of the taxable period. Do be aware that in some cases the start up of several companies together can divide this taxable income to enable greater savings.

Current rates of Corporation Tax

In Spain, corporate tax has several different levels and ranges from 15% to 30% depending on the turnover of the company; this is a very low rate when compared with its European neighbours. Newly formed companies will only pay 15% on the first 300,000 Euros and 20% on the rest. Companies that charged on an amount less than 5 million Euros will only pay 20% on the first 300,000 and then 25% thereafter. However, companies whose turnover is less than 10 million Euros will pay 25% on the first 300,000 and then 30% on the rest. Finally, companies with an annual turnover in excess of 10 million Euros will have to pay 30% of their profits as corporation tax.

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