For Spain, the corporate income tax (Impuesto sobre Sociedades) is governed primarily by Law 27/2014, of November 27, on Corporate Income Tax (Ley 27/2014, de 27 de noviembre, del Impuesto sobre Sociedades), as amended.
- Determine Taxable Income: Taxable income is calculated by subtracting deductible expenses from gross income.
- Apply Tax Rate: Once taxable income is determined, it is subjected to the applicable corporate income tax rate.
- Adjustments and Credits: Various adjustments, deductions, and tax credits are applied to reduce the tax liability.
- Payment and Filing: Companies are required to make advance payments throughout the fiscal year and file an annual corporate income tax return.
Applicable tax rates
| Taxable Income | Tax Rate |
|---|---|
| Up to €300,000 | 25% |
| Above €300,000 | 25-30% |
Note: SMEs may benefit from reduced rates, and certain industries or regions may have specific tax incentives.
Taxable income types
- Profits from business activities
- Capital gains
- Rental income
- Interest income
- Dividend income
- Royalties
- Other income derived from economic activities
Different revenue types
- Revenue from different sources is aggregated to determine taxable income.
- Expenses directly related to generating income are deductible.
Categories of Exempt Income:
- Certain dividends and capital gains from qualifying subsidiaries (subject to conditions).
- Income from tax-exempt entities or activities, such as certain non-profit organizations.
- Income from certain government bonds or securities.
Relevant Articles of Law 27/2014:
- Tax Rates: Article 29
- Taxable Income: Articles 10-14
- Exempt Income: Articles 21-23
Objectives of Legislative Provisions:
- To ensure fairness and equity in corporate taxation.
- To promote economic development and investment.
- To prevent tax evasion and avoidance.
Spain's corporate income tax system follows a straightforward methodology, with taxable income determined by deducting expenses from gross income and applying the applicable tax rate. SMEs may benefit from reduced rates, and various deductions and credits are available to further reduce tax liability. Taxable income includes profits from various sources, while exemptions are provided for specific categories of income to promote economic growth and investment. The legal framework, primarily governed by Law 27/2014, aims to maintain a balanced approach to corporate taxation, supporting economic development while ensuring compliance and fairness.
