Spain: Get full insight on corporate taxation in Spain!

Traditionally, Western European countries are moderate to high taxation destinations and Spain is no exception. Local resident companies are taxed at a moderately significant 25% corporate tax.

Special vehicles such as banks however are taxed at a higher 30% tax rate, with no surtax or alternative minimum tax option available. Favorably, tax resident companies with annual revenue equal or below to twenty million euro, are able to carry forward their business losses for many years, usually reaching up to 18.

Important consideration is that dividend and interest payments made to a non-EU parent company will ultimately incur withholding taxation of 21% flat. In comparison, the royalty payments are slightly higher when paying to a non-EU company will be subject to withholding tax rate of 25%.

Another consideration is the value added tax which in Spain is on the higher side with 21%. Companies with higher turnover than 6 million euro must file their VAT returns on a monthly basis. All other corporations are obligated to file their value added tax returns every quarter.

When talking about tax returns we must point out that resident Spanish companies are required to submit their annual financial statements and tax returns up to 6 months after the end of the financial year. The statements are submitted to the Central Mercantile Registry and need to be translated in Spanish in all cases.

These statements can be fully audit exempt if the following conditions are met i) the company’s assets does not exceed €2.85m or ii) the annual revenue does not exceed €5.7m and iii) the employees of the company do not exceed 50 people within the last 2 years.

Other important types of taxation include:

• Stamp duty at 1% of the value of the share capital of the notarized documents;
• Acquiring real estate in Spain incurred transfer tax of 7%;
• Royalty payments however suffer higher withholding tax of 25%.

International trading businesses will enjoy the broad network of double taxation treaties signed by Spain as a country will many reliable business partners around the globe, especially in Spanish speaking Latin America. Most notable trading partners outside of Latin America, with high trading, import and export positions include: i) China; ii) Singapore and iii) USA.