These notes are intended as a guideline to income tax in Spain and should not be used as a substitute for proper professional advice. Please contact us and we will be happy to assist you.
Major types of limited company in Spain
SA - Public Limited Company
- Minimum 25% paid up share capital;
- Minimum 60,121 Euros authorised share capital.
SL - Private Limited Company
- Minimum share capital 3,006 Euros.
All companies must submit annual accounts to its shareholders
for approval. These must be approved within six months from the
end of accounting period.
The audit limit is around 2.5 million Euros turnover. All companies need to submit annual accounts to the Mercantile Registry (Registro Mercantil).
As of 1st January 2015, the general rate of company tax in
Spain has been reduced from 30% to 28% in 2015 and 25% in 2016.
For small and reduced-sized companies, up to 2014 there were reduced rates, which have now been eliminated (as the reduction in the general tax rate renders them meaningless), except for a transitory period in 2015, when the rate is 25%, except for the profit over 300k Euros for medium-sized companies where the tax is 28%.
A company is defined as small if the turnover in the previous year was less than 5 million Euros and the company has between 1 and 24 employees. A company is defined as reduced-sized if the turnover in the previous year was less than 10 million Euros.
As of 1st January 2015, there has been introduced a new lower tax rate for newly-formed companies, which applies to the first two years in which it obtains a taxable profit. The rate is 15%.
Payment of Company Tax
The company tax return must be filed within 6 months and 25
days after end of accounting period. Payment by instalments of
company tax is in April, October and December.
As a general rule, each instalment is 18% of the previous year's company tax liability. A separate method of calculation applies to large companies whose turnover in the previous year exceeds a set limit.
Calculation of taxable income
The Starting point is net profit per accounts, calculated in
accordance with the Plan General de Contabilidad). Depreciation
must be within prescribed limits. See Rates and Allowances
Goodwill amortisation is allowable.
Movements in the following provisions are allowable for tax purposes: Doubtful debts, legal expenses, stock obsolescence, devaluation of securities, extraordinary repairs, unsold publications.
There is no distinction between long and short term gains. Tax losses can be carried forward for up to 10 years.
- Penalties and fines;
- Corporation tax payments;
- Gifts and donations other than to specifically approved organisations;
- Expenditure on improvement and enhancement of capital assets;
- Depreciation over maximum prescribed rates (unless it can be proved that this was the actual depreciation).
Capital gains made by companies are taxable as part of profits.
A consolidated tax return may be filed if an election is made
before start of tax year. Only resident companies with a
resident Ultimate Holding Company are included.
This election needs to be renewed every 3 years. There must be a 90% direct or indirect ownership for whole of both the current and prior tax year.
This is available for reinvestment in the same kind of asset,
between one year before and three years after disposal. Tax is
paid equally over either the seven following years, or the
actual depreciation period.
The new asset must be kept for seven years, or for its useful life if this is shorter.