Spain Tax system
If you are thinking to operate in Spain, it is important to know how Spain´s tax system is work.

Spain’s tax system is modern and competitive. The Spanish Tax Agency is known for its technological leadership. It is one of Europe’s most modern tax agencies, always state-of-the-art in its offer of electronic public services, like the obtention of tax certificates or the presentation of tax declarations online.

Spain imposes a moderate taxation, below the average of the EU-28 and the Eurozone.

Company Taxes

Fiscal benefits are calculated on the basis of the figures presented in the company’s accounting records. In general, costs related to business activities are deductible as long as they are correctly accounted for and justified. In addition, there are other fiscal incentives for certain, specific expenses.

The standard corporate tax rate is 25%; the effective tax rate could be reduced to 22.5% upon application of the new capitalization reserves.

As well, a series of tax incentives apply to corporate tax which can even further reduce the average corporate tax rate. The fiscal incentives system for the development of R&D&i activities is one of the most favourable of OECD countries, for large companies and small and medium enterprises alike. Spanish tax regulations enable the recovery of tax deductions for R&D&i activities which were not applied during the corresponding fiscal year due to insufficient positive taxable income, through a system of cash refunds that, in fact, transforms these into aid, regardless of the company’s profits obtained during a given fiscal year.

The tax incentives are further complemented by a “patent box” scheme that makes tax-exempt 60% of the income from use licenses or from the exploitation of intangible assets. The “patent box” scheme currently in effect in Spain is the most advantageous of any others existing in the EU, to the extent that the affected intangible assets are not limited to patents, as is the case in other countries, but rather encompasses to include income obtained from the transfer of models, designs, formulas, projects or even know-how.

Spain’s taxation system, furthermore, perfectly adapts to the interests of the most international companies, in counting with an important network of 94 Double Taxation Agreements, particularly relevant with countries of Latin America. The “participation exemption” scheme in effect in Spain grants companies the exemption of dividends or profit shares obtained from its subsidiaries that are not residents in Spain, as well as of any other capital gain obtained from the alienation of shares.

Spain also has a special taxation ache me for holding companies: Foreign Securities Holding Companies (ETVE), that promotes the internationalization of multinational companies from Spain on the basis of two, important advantages:

  • It establishes an exemption scheme for dividends of subsidiary companies and in relation to capital gains from the disposal of the mentioned shares.
  • It grants tax-exempt status in Spain for dividends distributed by the ETVE to its non-resident shareholders that proceed from the aforementioned exempt income.
Favourable taxes for foreign workers

To benefit from this special tax framework, expatriates must comply with certain conditions, such as not having been a resident of Spain during the previous ten fiscal years before the transfer to Spain. The allocation to Spain requires an employment contract in the country.

The set personal income tax for the first six fiscal years is 24% for all accrued income up to €600,000, and of 45% for accrued income exceeding €600,000.

The main advantage of this persona income tax scheme is that those individuals who fulfil the conditions are only taxed in Spain for dividends, interests and capital gains that originate in Spain. The returns on savings generated abroad are not subject to taxation.

Location: Wide range of office in major cities. Corporate Areas and Industrial and Technology Parks.

Among other advantages of Spain as a location, we must mention the availability of wide range of installations for different business activities spread across the entire geography of its regions: industrial estates, technology parks and logistics platforms. Likewise, a broad variety of office space is available, optimal for rendering all types of services as well as a large selection of commercial establishments and logistics facilities at accessible prices, with all of the necessary amenities.

The science and technology parks play a very important role in Spain’s police on innovation. The entire national network of technology parks is configured as an efficient instrument for the transfer of technology and for the creation and attraction of companies with high added value. They are available for small and medium companies as well as multinationals, offering a suitable environment for the development of technological know-how and the promotion of innovation.

Spain has over 80 Technology Parks, with close to 6,500 companies with activities here. This network is configured as a singular infrastructure for Corporate Technology Development.

If you are thinking to operate in Spain, we can help you. Contact us.

Source: Invest in Spain