As a business owner operating in Spain, you will be required to pay some sort of corporate tax in Spain. The corporate tax rate in Spain is generally the same for all types of companies, but there are some intricacies of Spanish corporate income tax law that need to be considered. Here is our guide to corporate tax in Spain for the year 2018; for more detailed information, please contact a legal advisor or professional accountant.
Corporate tax in Spain for resident and nonresident companies
Like personal income tax, the way your corporate income is taxed depends on whether your company is resident in Spain or nonresident. Resident companies are either incorporated in Spain, have their registered office here, or have their effective management in the country, and are taxed on their worldwide income. Nonresident companies are only liable for Spanish corporate income tax on the income that they earn in Spain, including capital gains. This tax applies to all companies that have status as a separate legal entity, such as limited liability companies and corporations.
Corporate tax rate in Spain for 2018 and exceptions
The basic corporate tax rate in Spain for 2018 is 25%, a record low that went into effect in 2016. Newly formed companies in the country have a special reduced tax rate of 15% for the first year in which they report a profit and the year following. Additionally, companies in certain fields may be subject to their own special tax rates. This rate is applied to your taxable income, which, according to corporate income tax law in Spain, is defined as your total revenue disclosed in the company’s financial statements minus deductible expenses, with any applicable tax adjustments. Capital gains income is treated under this law the same as any other business income.
Deductible business expenses must meet certain basic requirements: they must be for the purpose of earning profit and be properly documented. In most cases, this includes property taxes, salaries and bonuses you pay out. You are also allowed to deduct entertainment expenses for clients or suppliers up to 1% of your business’ turnover.
Certain tax incentives may also be available depending on your company and whether you meet specific requirements. For example, tax credits can be given in exchange for your business creating jobs for young people and people with disabilities. Incentives are also offered for investments in cultural performances and R&D (research and development).
Also, if your business activities result in you earning income in more than one country, Spain is party to many international tax treaties designed to protect you from being taxed on the same income twice. A legal professional with expertise in corporate tax law in Spain can ensure you meet your obligations without paying more than you have to.
Corporate tax in Spain: tax return forms and when to file
Tax forms in Spanish are called “modelos”. Below is a list of the forms that usually need to be filed for corporate tax in Spain on an annual, triannual and quarterly basis.
File annually:
- Modelo 190 (annual summary of withholding tax)
- Modelo 390 (annual summary of VAT tax)
- Modelo 200 or 201 (corporate tax form)
File three times per year (usually April, October and December):
- Modelo 202 (estimated tax payments for the current tax year based on last year’s taxes)
File quarterly:
- Modelo 111 (withholding tax due for your employees and invoices received from contractors, notaries, etc.)
- Modelo 349 (declaration of intracommunitary tax)