An Overview of Spain's Corporate Taxes
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.
Nonresident companies in Spain are only taxed on their Spanish income.
Company Tax or Corporate Income Tax
In Spanish, this known as Impuesto de Sociedades
. It 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
In Spanish, this is known as Impuesto de Actividades Económicas
. It 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.
Depending on a particular business' activities, businesses in Spain may also be liable for other taxes.
VAT in Spain
In Spanish, this is known as IVA
or Impuesto Sobre el Valor Añadido
). It isn’t a tax on you but on your customers, and more specifically, on the purchases that your customers make for your goods and services. The VAT rate ranges from 4% to 21%. However, as a business, you’re the middleman who has to collect the VAT and hand it over to the Spanish government via the Agencia Tributaria
. All businesses must file quarterly VAT statements and pay the corresponding amounts.
Other Business Taxes
Depending on a particular business’s activities, businesses in Spain may also be liable for other taxes. These may include various real estate taxes (see the last section of Taxes in Spain
) and a municipal tax on motor vehicles. Not a tax per se, but businesses must also pay Social Security contributions for each employee.
: Spain’s tax year follows the natural calendar year.
Straight from the Horse’s Mouth
: Spain’s main tax office, the Agencia Tributaria
, can be found on the web at http://www.agenciatributaria.es
: Business in Spain
, Taxes in Spain
, Start a Business in Spain
, Companies in Spain: The Types of Business Entities for Companies in Spain