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Spain: Related Information

Low-Tax and Incentive Regimes

Spain has a corporate income tax rate of 30% (2013) and has never been considered a financial center. In order to attract the headquarters of foreign multinational companies Spain accords favorable tax treatment to entities known as "co-ordination centers" in the Basque and Navarre areas. However, these schemes had to be terminated as a result of an adverse ruling by the European Commission. Spain has a relatively benign holding company taxation regime; and there is Venture Capital Fund legislation offering substantial tax breaks.

Spain's Economy Minister Pedro Solbes said in January, 2006, that the government would introduce proposals into parliament aimed at simplifying and cutting rates of taxation, including corporate tax, which at that time was 35%.

However, in a bid to make the reforms revenue neutral, Mr Solbes stated that the government would also seek to phase out a number of corporate tax deductions.

In the grip of recession, and desperate to reduce its soaring budget deficit, the Spanish government announced in September 2009 that its 2010 austerity budget contains almost EUR11bn in proposed tax increases.

From July 1, 2010, the government increasex the standard rate of VAT from 16% to 18%, and the reduced VAT rate applied to services and food production from 7% to 8%.

The VAT raised was raised to 21% from September 2012, with the reduced rate increasing to 10% at the same time.

 

 

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