Corporate Tax In Spain

February 16, 2021

The Corporate Tax Law was established by Law 43/1995, arising certain parameters on which the structure of this tax is currently based. However, it has undergone several modifications over the years since its publication.

This article explains the main aspects of this Corporate Tax.

What is Corporate Tax?

This tax is levied on the income obtained by a legal entity or an entity without legal personalities, such as investment funds, pension funds, among others. This is different from the tax on individuals whose name is Individual Income Tax.

What is Corporate Tax levied?

According to the aforementioned, this tax is levied on the income of all companies and other legal entities residing in Spain. For this purpose, those incorporated in Spain or whose effective headquarters are located therein will be considered as a resident.

What entities are subject to this tax?

Corporate tax is payable by legal and other entities without legal personality. Likewise, commercial companies, civil societies, cooperatives, sole proprietorships, associations, foundations, among others, will be considered as taxpayers of this tax.

At the same time, civil companies without legal personality and those without a commercial purpose are not taxpayers of this tax.

Taxable Income of Corporate Tax

The taxable income for the tax period is the result of subtracting the income subject to tax minus the costs and expenses accrued during the tax period. It should be noted that financial expenses for debts with related parties and whose purpose is to acquire shares of another group company shall not be deductible, nor expenses for employment termination that exceed a maximum amount.

Tax Rate and Quota

It will be multiplied by the taxable base indicated, being the general tax rate of 25%.

Form and Filing Deadline

The Corporate Tax return must be filed within 25 calendar days following the 6 months after the end of the tax period through “Societies Web”, which is the Tax Agency’s server, leaving aside the download of any type of telematic program.