Accounting and tax in Spain

Up-to-date information and local knowledge can help support and grow your business internationally, especially when it comes to accounting and tax regulations.

Corporate income tax (CIT)

In Spain, the CIT is a tax collected from companies, based on the net income they earn over the course of one business year. The general CIT rate was reduced from 30% to 28% for the 2015 year and will drop to 25% from 2016. For small and reduced-sized companies, the tax rate is 25% (while for medium-sized companies, a tax rate of 28% applies on any profit over 300k). A company is defined as small if the turnover in the previous year was less than €5 million and the company has between one and 24 employees. If the turnover in the previous year was less than 10 million, the company will be defined as reduced-sized. For newly-formed companies, a new lower tax rate of 15% was introduced on 1st January 2015, applicable for the first two years in which the company obtains a taxable profit.

Personal tax

  • Residents are taxed on all earned income (wages and investments). Taxpayers may choose between the individual regime or the joint regime for married couples. Under the joint regime, the combined income of the two taxpayers is considered and the allowances for both taxpayers are deducted (even if one has no income). This method effectively reduces the income tax burden on most low-income couples, particularly when one member has no income. Taxable income is divided in two parts: general base and saving base. General base includes salaries, self-employment income, real estate income, short term capital gains and other gains not arising from savings. Saving base includes two parts; firstly interest, dividends and insurance, and secondly, long term capital gains (over more than one year, such as stocks, investment funds and real estate).
  • Non-residents pay a flat rate on all Spanish-sourced earned income. The rate was 24.75% up until 2014. Since 2015, the rate is 24% but 19% for residents in other EU countries. Non-residents need to fill in a Form 210 for every income earned.

TMF Group Spain offers various accounting and tax services. If you are thinking to start a business or even expand your business into Spain, these are the services that we normally provide:

  • Annual accounts report
  • Bookkeeping services
  • Cash management services
  • Company tax report
  • Incorporation of limited companies
  • Tax completion or filing
  • All other legal compliance matters

Contact us to find out more solutions to manage your business.

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