In Spain, capital gains refer to the profits earned from the sale or transfer of capital assets, including real estate, stocks, bonds, and other investments. Capital gains can be categorized into short-term gains (assets held for less than one year) and long-term gains (assets held for one year or more).
Calculation of Taxable Capital Gains
Taxable capital gains are calculated by subtracting the acquisition cost and any allowable deductions from the selling price of the asset. The formula is as follows:
Taxable Capital Gains = Selling Price - Acquisition Cost - Allowable Deductions
Allowable deductions may include expenses related to the sale (e.g., brokerage fees, legal fees) and the cost of improvements made to the asset.
Applicable Tax Rates on Capital Gains
The tax rates on capital gains in Spain vary depending on the type of asset and the holding period. The tax rates for capital gains are as follows:
- For individuals:
- Long-term capital gains: Taxed at a flat rate of 19% for the first €6,000, and 21% for the portion exceeding €6,000.
- Short-term capital gains: Added to the individual's regular income and taxed at the applicable income tax rates, which range from 19% to 47%.
- For corporations:
- Long-term capital gains: Taxed at the standard corporate income tax rate, which is currently 25%.
- Newly created companies benefit from a reduced 15% tax rate for the first profitable period and the following one. Additionally, start-ups meeting specific criteria can apply a 15% rate for the first period they generate positive taxable income and the next three periods, provided they maintain start-up qualifications.
- Short-term capital gains: Included in the company's taxable income and subject to the corporate income tax rate.
The taxation of capital gains in Spain is governed by the Spanish Personal Income Tax Law (Ley del Impuesto sobre la Renta de las Personas Físicas) for individuals and the Spanish Corporate Income Tax Law (Ley del Impuesto sobre Sociedades) for corporations.
- Articles 33 and 35 of the Spanish Personal Income Tax Law: These articles specify the tax treatment of capital gains for individuals, including the distinction between short-term and long-term gains and the applicable tax rates.
- Articles 9 and 10 of the Spanish Corporate Income Tax Law: These articles outline the taxation of capital gains for corporations, including the inclusion of gains in taxable income and the applicable corporate tax rates.
