The key information you need to know about Spanish corporate tax rates for the years 2014, 2015 and 2016.
According to Spanish law, any company incorporated in Spain – with a registered office in Spain or its effective management in Spain – is resident in Spain and subject to Spanish corporate tax. Resident companies are charged corporate tax on worldwide profits and capital gains. Non-resident companies are taxed on their Spanish-source income and gains according to the guidelines of the relevant tax treaty. Branches are generally taxed in a similar way to subsidiaries.
What is the taxable income?
The taxable income is the amount left over when deductible expenses are subtracted from the profits, calculated according to the balance sheets of the company. Some expenses are not considered deductible for tax purposes. Disallowable items are:
– Penalties and fines.
– Corporation tax payments.
– Gifts and donations (except to certain organisations).
– Expenditure on improvement and enhancement of capital assets.
– Depreciation over maximum prescribed rates (unless proven that it was in fact real depreciation).
For taxable years 2013, 2014 and 2015, the depreciation rates applicable to tangible assets are limited to 70% of the maximum rates provided by law for corporate taxpayers with a turnover exceeding €10 million.
Corporate Tax Rates Applicable to 2014 – 2016
|General rate of corporate tax||30%||28%||25%|
|Companies dedicated to the exploration, investigation and exploitation of hydrocarbon deposits and other activities (law 34/1998).||35%||33%||30%|
|Newly-created companies, applicable to the first two years in which they obtain a taxable profit.||Profit under €300,000: 15% Others: 20%||15%||15%|
|Small companies with turnover in the previous year under 5 million euros and with less than 25 employees.||Profit under €300,000: 20% Others: 25%||25%||25%|
|Medium-sized companies with previous year turnover under 10 million euros.||Profit under €300,000: 25% Others: 30%||Profit under €300,000: 25% Others: 28%||25%|
Operating losses may be carried forward for up to 18 years, starting from the first period in which profits are earned. Tax losses can be carried forward up to 10 years. The carry back of losses is not permitted. For tax periods from 2001 to 2015 limitations apply on the use of the net operating losses if it is a big company.
What are the allowances and deductions in Spain?
Deductions are available for investments in the environment, double tax relief on dividends (subject to certain requirements), double tax relief for capital gains derived from the transfer of shares (under certain circumstances) and extraordinary profits reinvestment.
Capital gains derived from a holding non-resident company are exempt under two conditions:
- If there is a treaty for double taxation that includes an exchange of information clause with the country in which the company is resident.
- If the paying entity is subject to a tax equivalent to the Spanish corporate income tax (subject to certain requirements).
The tax year (1 January to 31 December) coincides with the accounting period. The tax period must not exceed 12 months.
When is corporate tax due?
Corporate tax must be filed and taxes paid within six months and 25 days of the close of the fiscal year (31 December). Corporations are required to make three advance payments of income tax in April, October and December of each year.
Other Taxes on Corporations
Payroll tax – Withholding tax on income from employment is applicable on payroll (i.e. in relation to personal income tax).
Social security – Read our article Employment, Payroll and Dismissal for more information.
Council tax – Read our article Council Tax in Spain for more information.
VAT – Read our article Spanish VAT (IVA) for more information.
Capital duty –
Capital duty at a rate of 1% is applicable to:
- The reduction of share capital (including demergers) – payable by the partners or shareholders.
- The liquidation of a company – payable by the partners or shareholders.
- Any other partner contribution that does not increase the share capital.
I have an inactive company, do I have to declare corporate tax?
Yes, the declaration must be made even if the company is inactive.