In this article we will offer you a complete guide on what taxes a company pays in Spain.
We also detail the tax forms that you must submit to comply with your tax obligations.
The Spanish tax system is extensive and varied. Understanding the different types of taxes that affect businesses is essential for any organization.
What taxes does a company pay in Spain? They can be categorized into two types:
Direct taxes: They tax the possession or generation of wealth.
Indirect taxes: They tax consumption.
Furthermore, these cyprus email list taxes can be classified according to their territorial scope as follows:
Below, we explain what taxes a company pays in Spain and what tax forms must be submitted.
TWEET IT! Learn all about the taxes a company must pay in Spain. Find out which tax forms you must file.
Corporate Tax (IS)
It is the main tax figure for the payment of direct taxes by companies.
It is characterized by the following:
It taxes the income of all companies (limited, civil, anonymous or cooperative) and legal entities based in Spanish territory. Legal personality is the circumstance that confers the status of IS taxpayer.
It is a state tax .
Tax rates may vary, but the general rate is 25%. Newly created entities that carry out economic activities will pay taxes in the first tax period in which the tax base is positive. In the following period, they will pay taxes at a rate of 15% unless they must pay taxes at a lower rate.
It is regulated by Law 27/2004, of November 27, and by Royal Decree 634/2015, of July 10 , which approves the Regulation.
It is levied on the net profit obtained from the activity of companies. That is, once the tax-deductible expenses incurred to obtain them have been subtracted from the income obtained by each company.
The tax models related to IS are the following:
Form 200: For the declaration of Corporate Tax and Income Tax for non-residents.
Form 202: To make the split payment of corporate tax.
Form 220: For groups of companies that, meeting the definition of a tax group set out in article 67 of the TRLSA, choose to apply this tax regime.
Sage 50 makes it easy for you to complete and file your corporate tax return. Find out how!
Value Added Tax (VAT)
It is an indirect tax that taxes consumption . It is characterized by the following:
It taxes consumption in the acquisition of deliveries of goods and services, intra-community acquisitions and imports of goods.
It is a state tax .
It is collected by companies that pay it to the Tax Agency through self-assessments. In these, the difference between the VAT charged on their sales and the VAT they bear on their purchases is entered.
There are three types of VAT :
General VAT (21%). This applies to most products and services, from clothing to professional services. Basically, it taxes everything that is not included in the following two types of VAT.
Reduced VAT (10%). This category taxes food products, pharmaceuticals, water and the purchase of housing, among others.
Super-reduced VAT (4%). Applies to essential goods and services , such as basic food items in the shopping basket.
It is regulated by Law 37/1992, of December 28, and by Royal Decree 1624/1992, of December 29.
In our country, VAT is applied in the Peninsula and the Balearic Islands. In the Canary Islands, the main tax figure for indirect taxation that replaces VAT is the Canary Islands General Indirect Tax (IGIC).
Sage 50 automatically completes Form 303, so you only have to send the tax file to the Tax Agency.
Withholdings on account of personal income tax
Legal entities are not subject to personal income tax , as they are subject to corporate income tax. They are required to make withholdings on account of personal income tax, which they must pay to the Treasury using the following tax forms :
Form 111 : Withholdings from payrolls or invoices of professionals.
Form 115: Withholdings on payment of property rental invoices.
Information statements
It is worth considering them. Although they are not tax returns and no taxes have to be paid, if they are not submitted the company will be penalized.
Form 347: Annual information form used to report the sum of transactions carried out with a client or supplier exceeding €3,005.06.
Form 349: This form must be submitted in the event of intra-community operations. For example, services, deliveries or acquisitions that are carried out outside of Spain, but within the European Union.
Tax on Economic Activities (IAE)
It is a direct, real and mandatory tax that is characterized by the following:
It taxes the performance of any type of economic activity by individuals and legal entities.
It is a tax managed by the City Councils .
It is paid annually .
Companies and self-employed persons are exempt from paying this tax during the first two years of their activity.
Self-employed persons or companies with a net turnover of less than one million euros are exempt from paying the tax.
Whether exempt or not, the company or self-employed person must register for the IAE. Forms 036 or 037 will be used.
To determine the amount of the tax payable, a series of rates are applied based on the National Classification of Economic Activities ( CNAE ). They constitute the starting point for the liquidation of the IAE , since they establish the tax elements of this tax and determine the quotas to be paid.
Property Tax (IBI)
The IBI is a direct tax of a real nature, municipal ownership and mandatory levy. It taxes the cadastral value of real estate .
This is a tax that accrues periodically and is managed jointly with the State Administration.
The taxable base for the IBI will be made up of the cadastral value of the land and the buildings of the real estate. This will be determined, notified and may be challenged in accordance with the provisions of the regulations governing the real estate cadastre.
There may be significant differences between municipalities in the aspects of this tax, so we can find variations in the following:
You will only pay this tax if you own property in your name. If you carry out your activity in a rented property, the owner will be the one who must pay this tax.
Other municipal taxes
Vehicle Circulation Tax ( IVTM ) : This is a mandatory tax applied to all motor vehicles , allowing them to circulate on public roads throughout the country. Its main characteristics are:
It is paid in the municipality where the vehicle has its tax address as of January 1 of the current year.
