Business Taxes in Spain
Posted by Dreamer
Information on Spain’s main business taxes – Company Tax, IAE tax, and VAT – as well as other business-related taxes and Spain’s tax year.
Company Tax or Corporate Income Tax
(Impuesto de Sociedades): This is a national business or corporate income tax in Spain on all types of Spanish companies (as well as nonresident companies in Spain) except the Sole Trader (Autónomo). (Sole Traders report their business and personal income together on their personal income tax return, IRPF, instead.)
The standard Company Tax rate is 30%, but small and medium companies (PYMEs), who are defined as having a net turnover of less than ten million euros each year, are only taxed at 25% on the first 300,000 euros earned and at 30% for income above that figure.
Spanish companies are taxed on their worldwide income. Nonresident companies in Spain, however, are only taxed on their Spanish income. In Spain business income for tax purposes is defined as all business revenue and includes all capital gains (though a capital gains tax credit may be available), less authorized expenses and VAT payments.
An annual Company Tax return should be filed with the Spanish tax authorities, the Agencia Tributaria, no more than six months and twenty-five days from the end of the company’s fiscal year. Businesses should also plan to pay three advance tax payment installments in April, October, and December.
Tax on Business Activity or IAE Tax
(Impuesto de Actividades Económicas): This is a local tax levied on resident and nonresident businesses in Spain with an annual income of more than one million euros. Even if your business brings in less than one million euros a year and you are not required to pay IAE tax, you should still make sure that you’re registered with the local authorities for IAE tax. If you live in a town with more than 50,000 inhabitants, check with your local town hall (ayuntamiento) for the local requirements on registering. If you live in a town with less than 50,000 inhabitants, check with your local provincial government.