Date de publication : 06-10-1907
The following information are for the sole purpose of providing a general overview of the local taxation of the Corporate tax aspects of the country. In any case, the information provided below cannot be considered as comprehensive or deemed to constitute specific legal advice.
Yes we tax in Spain
New tax reform: No specific information
New tax treaties: No specific information
Local tax advisors
No specific information on the local tax advisors.
The definition of Permanent Establishment follows the wording of article 5 of the OECD Model:
- Dependent agent who habitually concludes contracts in the name of a non-resident company (except if the activity is limited to purchase of goods);
- Fixed place of business, building site, construction, assembly or installation and any related supervisory activity, for a period of 6 months.
Resident companies are taxed on their worldwide income (« worldwide principle »). However, non-resident companies are only taxed on their revenues derived from Spain sources (« source principle »).
Entities are considered to be resident for tax purposes in Spain if they are incorporated under in Spain, if their legal seat is in Spain, or if their place of management & control is in Spain.
Note: the definitions of permanent establishment and place of residence are subject to the relevant provisions of any applicable double tax treaty, if any.
Corporate Income Tax
The general CIT tax rate is 25%.
New companies are taxed under a 15% CIT tax rate (1st and 2nd year).
Non-taxable income includes the following:
- Dividends received from qualifying participations
- Certain capital gains deriving from qualifying participations
Non-deductible expenses includes the following:
- Dividends benefiting from the participation exemption
- Interest in excess of the limitation of deduction threshold
- Fines and penalties
- CIT and similar taxes
Carry forward: Yes, but some restrictions may apply.
Carry back: No
Companies should submit the tax return annually within six months after the tax year.
Annual tax returns are established by the company on a self-assessment system.
Whithholding Taxes (payment to foreign companies)
The local tax rates in Spain are the following, subject to the provisions of an applicable double tax treaty, if any.
There is a 19% WHT on the profits paid from a branch to its foreign head office.
The general rate of WHT on dividends is 19% of the gross amount.
The general rate of WHT on interest is 19%.
The general rate of WHT on Royalties is 24%.
The general rate of WHT on management fees is 24% for non EU resident and 19% for EU resident.
The general rate of WHT on technical services is 24% for non EU resident and 19% for EU resident.
Generally, capital gains are taxed separately under a 19% tax rate.
Note: capital gains deriving from qualifying participations are exempt under the participation exemption.
Standard VAT tax rate is 21%
Reduced tax rates are:
- 10% (among others, food and non-alcoholic, land transport of passengers, hotel and restaurant, certain pharmaceuticals products,…);
- 4% (among others, basic food, books, newspaper, drugs and medicines, … )
Zero-rated supplies include, subject to certain conditions:
- exports of goods and services;
- intra-Community supplies of goods;
- Supply of ships and aircraft;
- Services related to the international transport of person;
Exempt supplies include, subject to certain conditions:
- Certain financial services ;
- Certain insurance services ;
- Training and education;
Note: exempt transactions differ from zero-rated transactions in that the input VAT associated with exempt transactions is not deductible.
EU taxable companies may claim a VAT refund to their own tax authorities through on the basis of the 13th EU Directive.
In case where for a tax period, Input VAT exceeds Output VAT, certain non-resident companies (which are not required to register and incur Spain-VAT in the course of their business activities in Spain) may apply for a refund.
Refunds are subject to the reciprocity principle, which means that Spain only refunds VAT to foreign companies in countries that offer similar refunds to Spain companies.
No other specific information of VAT in Spain.
The general statute of limitation is 4 years starting at the end of the year in which the tax return had to be filed.
There is no foreign exchange control in Spain. Income and capital could be freely repatriated.
There are no thin capitalization rules in Spain. However, there is a general limitation on the deduction of the borrowing costs.
Do not hesitate to share your experience in Spain with us in the comments below. Any comments are welcome !