The linchpin of corporate taxation in Spain is the local corporation tax.

The general Spanish corporate income tax rate was 30% until a few years ago and was later reduced to 28% and now to 25% in 2016.

In addition, there are reduced rates in special cases:

• Newly founded start-ups were able to claim a reduced tax rate of 15% in the 2015 and 2016 tax years. The main prerequisite was the commencement of a new activity. Although the reduction itself is only applicable for two financial years, it is only applicable from the first financial year that ends with a profit. There was already a comparable reduction in 2014. However, this only included a tax rate of 15% up to a maximum profit of EUR 300,000, and a rate of 20% for profits exceeding this amount.
• For small and medium-sized companies with a turnover of less than 10 million euros in the previous financial year, the tax rate for 2016 is 25%. In 2015, this rate was still limited to the first 300,000 euros, and profits exceeding this amount were taxed at 28%. As a result of the general reduction to 25% for 2016, the progression from 25% to 28% no longer applies to profits in excess of EUR 300,000.
• In 2014, the tax rate for micro-enterprises was 20 and 25 %. To be counted as a microenterprise, three conditions had to be met. The average annual number of employees had to be less than 25, the annual turnover had to be less than 5 million euros and the workforce had to be the same size or even have increased since this reduced rate was applied. However, there must actually be employees, i.e. a company in which only shareholders are active, or no staff apart from the managing directors, did not benefit from these reduced rates. However, if these conditions were met, 20 % was payable on the first 300,000 euros in profits and 25 % on profits in excess of this amount. In 2015 and 2016, the 25% rate became the general rate.
• Cooperatives only pay 20% on the profits of their own activities. If the profits are not attributable to cooperative activities, the general rate applies.
• Charitable foundations and associations are also subject to corporation tax, but only pay the reduced rate of 10% if they have been classified accordingly and registered correctly.
• Mutual insurance associations and pension funds, professional chambers, trade unions and similar institutions also pay the reduced corporation tax rate of 25%.
• In the case of investment companies with variable capital (so-called SICAVs), investment funds and real estate investment funds, the corporation tax rate is reduced to 1%, provided there are at least 100 shareholders.

Do you need advice on Spanish corporate tax law?

We advise you in individual cases, but also take care of your routine obligations to the Spanish tax authorities.