Last modified: 21/04/2024 10:44

Corporate taxation

	Rate %
Corporate income tax rate	25
Corporate income tax rate (reduced)	23
Branch tax rate (in general)	25
Capital gains tax rate	25
Banks & Oil resources	30
Start ups	15
Investment funds	1

Residence: An entity is deemed to be resident in Spain for corporate income tax purposes if it is incorporated under Spanish law, it has its registered office (seat) in Spain or its place of effective management is in Spain. It is also possible for a company established in a tax haven to be deemed to be resident in Spain if its principal assets are directly or indirectly located in Spain.

Basis: Resident companies are subject to corporation tax on worldwide income. Non-resident companies with no permanent establishment in Spain are taxed only on local – source income, subject to the provisions of an applicable tax treaty. Branches are subject to a similar treatment as subsidiaries in this regard.

Taxable income: Taxable income for the purposes of corporate income tax is derived from the worldwide accounting profits calculated according to Spanish Generally Accepted Accounting Principles and is adjusted upwards or downwards through the application of the tax adjustments determined under the legislation.

Alternative minimum tax: The budget law for 2022 introduced a new alternative minimum tax regime that is effective for tax periods beginning on or after 1 January 2022, and that applies to taxpayers that had net turnover in the prior year of at least EUR 20 million or that are part of a tax consolidated group. The minimum tax generally is calculated as the lower of (i) 15% of the taxable base, or (ii) the amount resulting after deducting certain tax credits established to promote investments by port authorities and foreign tax credits from 25% of the taxable base (provided the relevant company is subject to the 25% general corporate income tax rate). In the case of newly incorporated entities that comply with certain requirements, instead of the 15% and 25% rates for (i) and (ii), the relevant rates are (i)10% and (ii) 15%; in the case of credit institutions and certain oil & gas sector entities, the relevant rates are (i) 18% and (ii) 30%. The minimum tax regime is not applicable to some types of entities, such as Spanish real estate investment trusts (SOCIMIs), SICAVs (capital investment companies), pension funds, etc. There are also other special provisions or exceptions that may apply (e. g. regarding certain Canary Islands tax benefits).

Taxation of dividends: Dividends received are subject to corporate income tax but may be partially exempt in certain cases (see “Participation exemption”).

Capital gains: Capital gains are considered to be regular income for corporate income tax purposes and are taxed in the same way as other business income. A partial tax exemption is available for capital gains derived from the transfer of shares if certain requirements are met. Under the participation exemption, 5% of the capital gains is subject to tax at the standard corporate income tax rate of 25%, resulting in an effective tax rate of 1.25%

Losses: Net operating losses may be carried forward indefinitely. The carryback of losses is not permitted. Net operating losses may be offset against up to 70% of the taxable base prior to the application and funding of the capitalization reserve. The limit is 50% for taxpayers whose turnover in the previous 12-month period was between EUR 20 million and EUR 60 million; and the limit is 25% for taxpayers whose turnover in the previous 12-month period was greater than EUR 60 million. However, net operating losses that do not exceed EUR 1 million may be offset without limitation in any case. The limitation also may not apply in dissolution situations under certain circumstances, or where net operating losses are used to offset taxable income in certain debt restructuring transactions. Additional restrictions may apply if there has been a change in ownership. Also, acreditation of losses within a tax group observes a different set of requirements and specifics.

Foreign tax relief: Resident taxpayers are granted a tax credit for foreign direct taxes incurred that are similar to the Spanish corporate income tax. The credit is limited to the lower between (i) 95% of the tax that would have been payable in Spain had the income arisen in Spain, and (ii) the actual foreign tax incurred (provided it does not exceed the applicable tax treaty rate).

Participation exemption: Dividends and capital gains from shareholdings in Spanish and foreign subsidiaries may be 95% exempt from taxation (prior to 1 January 2021, a 100% exemption applied, and some taxpayers may remain eligible for a full participation exemption under a transition rule described below). To qualify for the participation exemption, among other requirements, a participation of at least 5% in the subsidiary must be held for at least a one-year period (for dividends, the one-year period may be completed after the dividend payment). Until 1 January 2021, the 5% requirement was deemed to be met if the holding in the subsidiary exceeded EUR 20 million. This special rule no longer applies. However, under a transition rule, taxpayers with shareholdings acquired in tax periods beginning prior to 1 January 2021 that had an acquisition value of over EUR 20 million but that do not meet the shareholding percertange of 5% may continue to apply the full exemption (if the general requirements are met) for dividends and capital gains in fiscal years 2021 through 2025. For shareholdings in foreign subsidiaries, there are additional requirements that the foreign subsidiary be subject to an income tax similar to the Spanish corporate income tax at a nominal tax rate of at least 10% and not be resident in a tax haven (except in certain cases for EU tax residents). This minimum level of taxation is deemed to be met if the foreign subsidiary is resident in a country that has concluded a tax treaty with Spain and is eligible to treaty benefits. There are several circumstances in which the participation exemption does not apply or applies with restrictions, such as where the payment of dividends generates a tax-deductible expense at the level of the entity paying the dividend, or, in the case of capital gains, where the taxpayer previously has claimed tax-deductible impairments or financial goodwill deductions that are pending recapture, among other things.

Holding-company regime: A special holding company regime (ETVE) operates to allow dividends stemming from foreign income, qualifying for the participation exemption, and paid to non residents (other than residents in a tax haven) to be free from witholding tax.

Tax-based incentives: Available incentives include an R&D and technological innovation tax credit, tax credits for investments in Spanish film or audivisual productions, and a patent box regime. Under certain circumstances, the limit of EUR 3 million that may be claimed as a cash rebate for the R&D credit is increased to EUR 5 million. The effective use of certain tax credits may be limited following the introduction of the minimum corporate income tax regime.

Group relief/fiscal unity: Profits and losses within a qualifying group of companies may be consolidated. A group consists of a parent company and any subsidiaries in which it holds at least 75% of capital. All companies must be resident in Spain. A Spanish permanent establishment may qualify as a parent company provided that it belongs to an entity that is not resident in a tax haven. However, Spanish companies without a common Spanish parent may also form a tax group if, inter alia, the non-resident parent entity is not resident in a tax haven and holds at least 70% or 75% of the subsidiaries. Within a tax group, each member must still file a separate tax return, although it shows zero liability. The parent company’s tax consolidation return aggregates the tax result of each member and eliminates intragroup transactions. The resulting tax liability of the group is due from the parent company and then apportioned amongst the group members according to their individual results.

Small company/alternative tax regimes: Taxpayers with a yearly revenue below EUR 10 million (computed on a group basis if applicable), will be subject to certain tax incentives such as: free depreciation deductibility; depreciation of new tangible fixed assets, real estate investments and intangible fixed assets; impairment losses due to debtors default; taxable base balancing reserves. Additionally, a brand new start up and innovation law is on the making by the legislative branch.

Corporate taxation: compliance

Tax year: The tax year is the same as the calendar year, it goes from the 1st of January to the 31st of December.

Consolidated returns: In Spain, each member of the consolidated group has to file a separate tax return, although the liability is zero. The parent company´s tax consolidated return aggregates the tax result of each member. The resulting tax liability if the group is due from the parent company and then apportioned amongst the group membres according to the individual result.

Filing and payment: As a general rule, the corporate tax return has to be filed at the 25th of July of the following year at the latest

Penalties: There are some penalties that arise when some formalities are not complied with, specifically there are penalties for late presentations.

Taxation of individuals

For income deriving from employment, business activities and real estate:

Taxable Income (up to EUR)         Tax liability (EUR)       Excess of taxable base (up to EUR)        Tax rate (%)

                 0                                              0                                       12,450                                            19

            12,450                                      2,365.50                                 7,700                                            24

            20,200                                      4,225.50                               15,000                                            30

            35,200                                      8,725.50                               24,800                                            37

            60,000                                    17,901.50                              240,000                                           45

           300,000                                  125,901.50                           Remainder                                        49

For capital gains, dividends and interests:

Taxable Income (up to EUR)         Tax liability (EUR)       Excess of taxable base (up to EUR)        Tax rate (%)

                 0                                              0                                         6,000                                            19

              6,000                                     1,140                                     44,000                                            21

            50,000                                    10,380                                  150,000                                            23

           200,000                                   44,880                                  Remainder                                       26

Residence: According to Spanish law, an individual is considered to be resident in Spain for tax purposes when any of the following requirements are met: – The individual is physically present in Spain for a period of more than 183 days in a tax year – The centre of the individual’s activities or economic interests is located in Spain or – The individual’s spouse and minor children have their residence in Spain, unless it is proved that the individual has effectively transferred residence for tax purposes to another jurisdiction

Basis: An individual resident in Spain is liable to progressive personal income tax rates on his worldwide income. A non-resident individual is liable to flat personal income tax rates (19%/24% depending on the nature of the income and if the tax residence is within the EU) on his Spanish-source income only.

Taxable income: Tax residents: – Employment income: salaries (-) social security contributions (-) 2,000 Euros for general expenses (-) certain expeneses like union contributions or professional association contributions. – Business activities income: business income (-) expenses related to the business – Real Estate income: real estate income (-) expenses related to the real estate – Capital gains: capital gain (-) expenses related to the acquisition and the transfer of the asset – Financial income (interests, dividends, etc): In general terms, the only deductible expense is the share’s deposit fee. Non-residents, residing within EU: In general terms, they may deduct the same expenses as tax residents. Non-residents, residing out of EU: In general terms, they may not deduct expenses.

Capital gains: Tax residents: Capital gains are taxed under a progressive tax rate (19%-26%). Losses may be offset with capital gains. Non-residents: Capital gains are taxed under a flat tax rate (19%). Losses may not be offset with capital gains.

Deductions and allowances: An individual resident in Spain is entitled to a tax-free allowance. The portion of the taxable income that is not taxed depends of the personal and family circumstances besides the worlwide income. The general tax-free allowance is 5,550 euros. There are further deductions and allowances for certain income (maternity benefits, some foreign income, etc) and for certain expenses (pension savings, housing rent, etc).

Foreign tax relief: Income derived from employment performed abroad may be tax exempted if certain requirement are met. Further foreign-source income may not be subject to taxation in Spain according to the Double Tax Treaties signed by Spain

Taxation of individuals: compliance

Tax year: It coincides with the calendar year. In case of death of one of the taxpayers, the accrual occurs on the date of death of the latter.

Filing and payment: From the first week of April of the year following the accrual until the end of June. The 2023 return is filed from April 6, 2024 to June 30, 2024. Tax payers may request a 2 installments payment , so that 60% is paid in the aforementioned declaration period and the remaining 40% on the following November 5. Taxpayers (the family unit composed of marriage and minor children) can file a joint return or choose to file individual returns for each of the members of the family unit. In case of death during the year of one of the spouses, individual declaration must be submitted.

Penalties: Late submission without prior notice from the Tax Authority: Surcharge of 1% for each month or fraction of a month of delay in fulfilling the obligation. As from a year of delay, interest on late payment is also required on top of interests. If the presentation and payment is made after the notice of the Tax Authority, penalties are applicable instead of surcharges, varying from 50%-150% of the amount not duly paid (reductions for conformity -30%- and prompt payment -40%- may be applicable) are foreseen.

Rulings: The statute barred period is in general four years. This period may be interrupted and begin again as a consequence of certain actions taken both by the Tax Payer or the Tax Authorities. During this period, the Tax Authority can check the return filed, make assessments and impose penalties as previously explained .

Withholding taxes

Type of Payment	Resident recipients*		Non-residents recipients
	Company	Individual	Company	Individual
	Rate (%)	Rate (%)	Rate (%)	Rate (%)
Dividends	0/19%	19%	19%	19%
Interests	0/19%	19%	0/19%	0/19%
Royalties	0/19/24%	15/19/24%	19/24%	19/24%

Branch remittance tax: This tax applies to after-tax paid to a foreign head office, unless the head-office in is not located in an EU Member State. The applicable tax rate Is 19% The Branch remittance tax is not applicable withing the EU or under some DTT.

Anti-avoidance legislation

Transfer pricing: The prices agreed between related parties shall be valued at their market value, as if they had been agreed by independent third parties, respecting the principle of free competition. Article 18 of Law 27/2014, of 27 November, on Corporate Tax contains a wide variety of the entities considered as related parties according to the Spanish legislator. o An entity and its partners or shareholders (or their family members) having a stake of 25 % or more o An entity and its directors or administrators (or their family members), except in the case of remuneration for the exercise of their functions.

o Two entities that belong to the same group of companies, as defined in the Commercial Law o An entity and the directors or administrators of another entity, when both entities belong to a group.

o An entity and another entity indirectly owned by the former in at least 25 percent of the capital stock or equity. o Two entities in which the same partners or shareholders (or they family members) participate, directly or indirectly in, at least, the 25 percent of the capital stock or equity.

o An entity resident in Spanish territory and its permanent establishments abroad. Spain generally follows the OECD Guidelines when it comes to transfer pricing. This means that both the traditional transactional methods and the transactional profit methods are accepted.

Interest restriction: Financial interests cannot exceed 30% of the company’s operating profit (a sort of EBITDA, as defined by the tax Law). However, a tax deduction of 1 million € is permitted.

Controlled foreign companies: Spanish CFC rules seek to avoid the effects produced when Spanish tax resident companies or individuals place their capital in low-taxed foreign companies or permanent establishments to avoid including passive income generated by such capital in their taxable bases. Under this regime, Spanish tax resident companies pay Spanish CIT on the income obtained by a non-resident subsidiary or permanent establishment upon meeting certain requirements, including, specifically, , that the CIT payable by the non-resident subsidiary or permanent establishment must be under 75% of the tax that would be payable in Spain and, in the case of non-resident subsidiaries, that the Spanish parent company must own, individually or together with other related companies or individuals, over 50% of the non-resident subsidiary’s share capital, equity, profits, or voting rights CFC rules are not applicable to companies or permanent establishments resident for tax purposes in the EU or in a State that is part of the European

Economic Space Agreement if the taxpayer proves that they carry on a business activity or they are Collective Investment Institutions (CIIs) regulated in EU Directive 2009/65/CE other than those established in Section 54 of the Spanish CIT Act and domiciled in an EU member state. There are two types of CFC: • Global Inclusion’: A global CFC regulation applies if the non-resident company does not have at its disposal an adequate structure of material and human resources unless it can justify that its operations are performed using material and human resources existing in a non-Spanish company of its same corporate group or that there are valid economic/business reasons for its incorporation and operations. With this regulation, all income obtained by the company not resident in Spanish territory should be included in the Spanish company’s tax base. • ‘Specific type of income inclusion’: When the conditions for applying the international tax transparency regime are met and the requirements for the application of the ‘global CFC’ are not met, the following income obtained by non-resident investees should be included in the Spanish company’s tax base: o Income generated from real estate assets not assigned to a business activity. o Income generated from an interest held in the equity of any type of company and from the assignment of own capital to third parties. This includes dividends and capital gains.

o Capitalisation and insurance operations in which the beneficiary is the company itself.

o Income generated from industrial and intellectual property, technical assistance, real estate, image rights, and the leasing or sub-leasing of businesses and mines.

o Income generated from transfers of the aforementioned assets and rights.

o Income generated from lending, financial, and insurance activities and the provision of services if they generate a taxable expense in the Spanish resident company. The positive income obtained in this case will not be included if over 2/3 of the gross income obtained by the non-resident company due to these services comes from services provided to non-related companies.

o Income generated from derivative financial instruments. o Income generated by insurance, credit, leasing and other financial activities unless obtained in the course of economic activities.

o Transactions involving goods and services carried out with related persons or entities, where the non-resident entity or permanent establishment adds little or no economic value. The types of income indicated above should not be imputed when the sum of these amounts is less than 15% of the total income obtained by the non-resident company or permanent establishment abroad, unless the income is generated from derivative financial instruments, which should be imputed in its entirety. In addition, the ordinary level of CFC will not apply if the income indicated above corresponds to non-taxable expenses incurred by Spanish tax resident companies.

Hybrid mismatches: The Royal Decree-Law 4/2021, of March 9, 2021transposes Council Directive (EU) 2016/1164 of 12 July 2016, amended by Council Directive (EU) 2017/952 of 28 May 2017 (ATAD II Directive), as regards “hybrid mismatches”, and amends the corporate income tax and non-resident income tax laws. The wording states that expenses cannot be deducted or the ability to deduct them must be deferred, or otherwise taxable revenues must be added, in the following cases, if the tests expressly specified in the decree are met:

a) Deduction without inclusion: scenarios in which an expense is deductible in one territory whereas it is not treated as a taxable revenue in the country of the recipient (except in the cases mentioned below involving exemptions, financial agreements subject to a special tax regime or pricing differences as a result of applying the rules on controlled transactions), or is subject to reduction in the tax rate or to any deduction or refund of tax other than a credit to avoid legal double taxation, as a result of the existence of different characterizations of the expense or of the legal nature of the taxpayers involved.

b) Double deduction: scenarios in which a same expense is deductible in two countries or territories.

c) Hybrid permanent establishments: scenarios involving deduction without inclusion or double deduction stemming from differences in the recognition of revenues and expenses, or even from recognition of the actual existence of a permanent establishment, between the country where the permanent establishment is located and the country where the parent company is situated.

d) Imported mismatches, occurring where the mismatch takes place in relation to a third entity in another country or territory but gives rise to a deductible expense in Spain.

e) Structured arrangements, in which the generation of a deductible expense without any tax on the related revenue or of an expense deductible in two or more countries or territories forms part of the expected return under the arrangement (or the arrangement has been designed to produce exactly that outcome). For these purposes, a structured arrangement includes any agreement, transaction, scheme or transaction in which the tax advantage obtained from hybrid mismatches is priced into its terms, or which has been designed to produce the outcome of those mismatches, unless the taxpayer or a related individual or entity could not reasonably have been expected to be aware of them and does not share the tax advantage.

f) Double use of tax withholdings, for the purposes of the tax credit for international double taxation.

g) Double tax residence, where it means that an expense is tax deductible in two countries or territories at the same time. This new legislation comes into force on March 11, 2021 and applies for periods that commenced on or after January 1, 2020 that have not ended on that date.

Disclosure requirements: Taxpayers should support the arm’s length nature of their intercompany transactions in a transfer pricing documentation study that meets certain legal requirements that largely follow those contained in the OECD Guidelines. The documentation is made up of a Master file and a Local file. A simplified level documentation may apply to companies that are part of a group having a net turnover of less than EUR 45 million.

Penalties may be levied if taxpayers fail to provide their transfer pricing documentation study when it is requested by the tax authorities, generally in the context of a tax audit. Transfer pricing documentation that is deemed to be complete and accurate protects Spanish taxpayers from penalties, if the tax authorities propose a transfer pricing adjustment. Country-by-Country reporting The Spanish-resident ultimate parent company or designated entities for groups with a consolidated turnover of more than EUR 750 million are required to file the Country-by-Country report within 12 months of the end of every tax period.

Furthermore, and consistent with the OECD’s Action 13, this information must be filed for those entities that are tax residents in Spain but are not the “Ultimate Parent Entity” of a MNE group if certain criteria are met. The Spanish subsidiaries of a group that is subject to Country-by-Country reporting requirements are required to file a Country-by-Country disclosure form. In this form, the Spanish affiliates must identify the group company and the territory of residence of the entity required to file the Country-by-Country report. Disclosure form 232 Spanish taxpayers are required to file a form that identifies their intercompany transactions and transactions with tax havens. The tax return should be filed during the month following the ten-month period after the end of the fiscal year which the information to be provided refers to. In other worlds, for fiscal years ending December 31, it should be filed between November 1 and 30.

Exit taxes: With effects for tax periods starting on or after 1 January 2021, the Law amends the current wording of the Spanish provisions on exit tax to align it with ATAD I. While the current Spanish exit tax rules allow for an indefinite deferral when the migration takes place to another EU Member State (taxation being triggered when the relevant assets and/or the company is sold), the Law introduces a maximum five-year deferral with equal annual installments. The Law also details the circumstances which terminate the deferral before the five-year period elapses (namely, the transfer of the relevant assets to a third-party, transfer of the tax residence or of the assets to a non-EU Member State, liquidation or bankruptcy proceeding of the entity, or failure to meet payment of the deferral installments).

The constitution of guarantees in these installment payments will only be required exceptionally, when it is justified by the existence of rational indications that the collection of the debt could be frustrated or seriously hindered.

In addition to this, the transfer of the activity of a PE in the Spanish territory to another State has been introduced as a new exit tax scenario for Nonresidents’ Income Tax (NRIT) purposes, in line with ATAD I. In the event of a change of residence or transfer to Spain of assets or activities that have been subject to exit taxation in an EU Member State, the value determined by that EU State will be considered as the tax value in Spain (unless it does not reflect the market value).

General anti-avoidance rule: Spain has various general anti-avoidance rules expressly provided for in the General Tax Code (Ley General Tributaria), developed by case law or obtained from other sources such as the Civil Code. In this regard, the Spanish tax authorities have used different tools to challenge tax avoidance such us fraus legis, sham, indirect purpose business or the disregard of legal entity known as the levantamiento del velo (‘lifting the veil’) doctrine.

Digital services tax and Other significant anti-avoidance legislation: Digital Services tax The provision of certain digital services (online advertising, online intermediary services, and data transmission services) involving users located in Spain is subject to a 3% tax. Only those entities (Spanish tax resident or not) whose total income for the previous tax year exceeds EUR 750 million or those entities whose income from the provision of digital services carried out in Spanish territory in the previous tax year exceeds EUR 3 million will be considered taxpayers.

For entities belonging to a corporate group, the thresholds are determined at group level. DAC 6 Spanish DAC6 transposition rules have been enacted by way of Law 10/2020 of December 29 2020, which regulates the basic features of this new reporting obligation and establishes the applicable penalties in case of default. The provisions of Law 10/2020 are further developed by Royal Decree 243/2021, of April 6 2021, which regulates the remaining details and aspects of the reporting obligation (among others: the requirements to be fulfilled by cross-border arrangements, the role of intermediaries with whom the main reporting obligation lies, the information making up the mandatory content of the report). It is important to highlight that the Spanish transposition rule has stretched the personal scope of this legal professional privilege to every intermediary and not only to lawyers themselves. It also contains the rules regarding the triggering of the reporting obligation and the timeframe for communicating the information.

As regards to hallmarks, Royal Decree 243/2021 refers to the Annex IV of the Directive with certain specifications. As opposed to other member states, the Spanish tax authorities have not yet published a detailed guidance on the interpretation of the applicable provisions or hallmarks. However, the tax authorities have published certain ‘technical’ instructions on the fulfillment of the relevant reporting forms that shall be used for communicating the reportable cross-border arrangements (Form 234), updating the information on marketable cross-border arrangements (Form 235) and reporting the use in Spain of cross-border arrangements that had been previously reported (Form 236). DAC6 reporting obligations are effective in Spain as of April 14 2021, when the approval of the official reporting forms triggered the 30-day period to communicate all the reportable arrangements, both corresponding to the so-called transitional periods (i.e. those whose first step was implemented between June 25 2018 and April 13 2021) and to any new arrangement as from April 14 2021.

Value-added tax/Goods and services tax

Type of tax: VAT is an indirect tax due on the supply of goods and services for professional purposes, on the importation of goods from outside the European Union and on ‘intra-EU acquisitions’ of goods from other EU Member States. certain deliveries and supplies are exempt.

Standard rate: 21%

Reduced rates: 10% (e.g. service in restaurants, transports, medical equipment…)and 4% (e.g. bread, cheese, eggs, newspapers…)

Registration: All taxable persons (businesses and entrepreneurs) must register for VAT before starting to supply goods or services. There is no registration threshold for small businesses.

Filing and payment: Periodic VAT returns: – The standard return is filed quarterly (April, July, October and January) – Taxable persons with a turnover exceeding 6 010 121.04 euros in the previous calendar year and VAT groups must file monthly returns. – Taxpayers may opt for the monthly refund, in which case they must submit monthly returns. Returns must be submitted no later than the 20th day of the first month following the end of the refund period and must be accompanied by payment of the VAT due as shown in the return. Annual summary declarations must also be made by taxable persons (January), except those with a turnover exceeding EUR 6 010 121.04 (subject to a special reporting scheme named “ISI” or “Immediate Submission of Information”).

Social security contributions

Social security contributions are payable by employers and employees. Contributions are made to five different funds, but employees only pay in three of them. 

Income thresholds and ceilings apply, but the precise amounts depend on the employee’s professional category. Thus, the threshold for engineers and university graduates is 1847,40 euros per month (annual equivalent: 22168,8 euros), while for workers it is 44.1 euros per day. However, in 2024, the income ceiling for all categories to which a monthly threshold applies is EUR 4,720,50 per month (an annual equivalent of EUR 56646). 

Contributions are charged on an employee’s gross income, excluding certain benefits in kind and expenditure benefits. 

The rates applicable in 2022 are shown in Table 11 below. 

Table 11 Social security contribution rates in 2022.  

Background/ Nature	Employee contribution rate (%)	Employer contribution rate (%)	Total (%)
General risks	4.70	23.60	28.30
Unemployment	1.55 / 1.601	5.50 / 6.701	7.05 / 8.301
Wage  guarantee	0.00	0.20	0.20
Occupational training	0.10	0.60	0.70
Industrial accident	0.00	Varies2	Varies2
MEI	0.12	0.58	0.7
Total	6.47 / 6.52	30.48 + / 31.681+	36.95 + / 38.201+

Notes 

¹                  The lowest rates apply to workers on permanent contracts and the highest rates to those on temporary contracts. 

²                 The exact rate varies depending on the nature of the occupation. increasing with increased risk. Thus, the rate for office workers is 1.5% and the rate for construction workers is 6.7%. 

Self-employed

Since 2023, self-employed employees started to contribute Social Security depending on the specific net yield earned during the calendar year. The Government stated a transitory period, initially for 3 years (2023-2025), in which the self-employed will be able to choose between a range of Social Security bases and therefore to pay a smaller or higher quota. In general terms, the coverage includes contingencies for common or occupational diseases, work accident, unemployment benefit, vocational training and the intergenerational equity mechanism and the applicable rate is 31,7%. In addition, there is a flat rate of €80 per month for the first 12 months of activity, regardless of net income. In the following 12 months, the self-employed can continue to pay the €80 monthly fee if the net benefit does not exceed the SMI.

Other taxes

Capital duty: The shareholders are responsible for a 1% capital duty on capital decreases and firm dissolution. In some circumstances, capital duty is incompatible with transfer tax and stamp duty, but it is not with VAT.

Immovable property taxes: Property tax is a type of local tax placed on property owners in Spain. Depending on the type of property (rural or urban) and the municipality where it is located, the tax liability is a percentage of the rateable value of the property. Each municipality can set its own rates, with a minimum and maximum that can be raised slightly provided certain conditions are met: Urban property (%) Rural property (%) Special properties (%) Minimum 0.4 0.3 0.4 Maximum 1.1 0.9 1.3

Transfer tax: Transfer tax Inter vivos transfers, such as real estate transfers and real estate leases that are exempt from VAT, are normally subject to a transfer tax, which ranges from 6% to 11% depending on the region. Building transfers made after the first are exempt from VAT, but they are still subject to transfer tax in theory. Residential leases are not subject to VAT, but are subject to transfer tax. Transfers of both listed and unregistered shares are exempt from both transfer tax and VAT in theory. This exemption does not apply to transfers of unlisted shares on a secondary market by a firm attempting to avoid paying tax on a direct transfer of real estate it owns. For this end, Spanish law creates a set of circumstances in which it is presumed that the intent is to escape taxes. This exemption does not apply to transfers of securities received as a result of banks’ incorporation of asset management businesses or transfers of securities of banks affected by Law 9/2012’s integration plans, which will be exempt from transfer tax. Furthermore, if certain conditions are met, acquisitions of assets in the Canary Islands may be excluded from transfer tax (and IGIC). Transfer tax does not apply to restructuring transactions. Mergers, spin-offs, share exchanges, and some in-kind donations are all considered restructuring transactions for this purpose.

Stamp duty: Stamp duty is primarily charged on notarial instruments and records that document economic transactions that must be registered in public registries (e.g., company, land, and industrial property registries). Transfer tax and capital duty are incompatible with stamp duty; however, VAT is. The overall rate ranges from 0.75 to 1.5 percent, depending on the region of Spain, and there are variable rates for other taxable events. Certain business (e.g., bills of exchange, promissory notes), court, and administrative documents are also subject to stamp duty.

Net wealth/worth tax: Wealth tax is imposed on the worldwide net assets of Spanish tax residents and on the goods and rights of Spanish non-residents that are located, may be exercised, or should be complied with in Spain. This tax is eligible for the following tax relief: – A tax-free minimum amount. Every autonomous community in Spain has the authority to set their own minimum tax-free amount. – If an autonomous community does not define its own minimum tax-exempt value, Spanish legislation (EUR 700,000) will be applied. The amount applicable to non-residents of Spain will always be the amount determined by Spanish legislation. – Tax exemption is available for up to EUR 300,000. – If specific conditions are met, tax exemptions may be available for family businesses or commercial assets. The tax burden is computed by multiplying the net taxable base by the progressive rates set by the autonomous communities in Spain (i.e. after applying tax relief). The following scale will apply if the respective autonomous community does not adopt its own progressive rate scale: Taxable base (up to EUR) Tax liability (EUR) Rest of taxable base (up to EUR) Applicable rate (%) 0.00 0.00 167,129.45 0.2 167,129.45 334.26 167,123.43 0.3 334,252.88 835.63 334,246.87 0.5 668,499.75 2,506.86 668,499.76 0.9 1,336,999.51 8,523.36 1,336,999.50 1.3 2,673,999.01 25,904.35 2,673,999.02 1.7 5,347,998.03 71,362.33 5,347,998.03 2.1 10,695,996.06 183,670.29 and above 3.5 Autonomous communities may create their own tax relief or exemption from the wealth tax. Several autonomous communities have already announced that they aim to implement a complete wealth tax exemption. If a taxpayer has a tax due or their fortune (exempt or not) reaches EUR 2 million, they must file wealth tax returns.

Inheritance/gift taxes: Gift and inheritance taxes are levied on property and rights acquired by Spanish tax residents by inheritance, legacy, or other types of succession, as well as through donation or other inter vivos legal transfers. Spanish gift and inheritance tax is imposed on property and rights obtained by non-residents of Spain in the aforementioned ways, regardless of their nature, that are located, may be exercised, or should be complied with in Spain. If a DTT exists between Spain and the non-country resident’s of residence, taxation will be determined by the DTT in effect. The tax is based on the net acquisition value of the assets. The tax burden will be determined by factors such as the taxpayer’s relationship with the donor/deceased or the taxpayer’s previous wealth. The autonomous communities of Spain have broad authorities that allow them to enact their own rules governing various components of this tax, and several have provided significant tax relief. The EU Court of Justice ruled on 3 September 2014 that Spanish gift and inheritance tax regulations were an impediment to free movement of persons and capital, and that they violated the Treaty on the Functioning of the European Union by allowing discrimination in the tax treatment of gifts and inheritances between resident and non-resident successors and donators, as well as between resident and non-resident successors and donators. The legislation includes a number of provisions aimed at equating tax treatment for the discriminatory instances identified by the EU Court of Justice. The following are the general tax rates (which can be changed by autonomous communities): Taxable base (up to EUR) Tax liability (EUR) Rest of taxable base (up to EUR) Applicable rate (%) 0 7,993.46 7.65 7,993.46 611.5 7,987.45 8.50 15,980.91 1,290.43 7,987.45 9.35 23,968.36 2,037.26 7,987.45 10.20 31,955.81 2,851.98 7,987.45 11.05 39,943.26 3,734.59 7,987.45 11.90 47,930.72 4,685.10 7,987.45 12.75 55,918.17 5,703.50 7,987.45 13.60 63,905.62 6,789.79 7,987.45 14.45 71,893.07 7,943.98 7,987.45 15.30 79,880.52 9,166.06 39,877.15 16.15 119,757.67 15,606.22 39,877.16 18.70 159,634.83 23,063.25 79,754.30 21.25 239.389,13 40,011.04 159,388.41 25.50 398,777.54 80,655.08 398,777.54 29.75 797,555.08 199,291.40 and above 34.00

Other: In addition to the taxes listed above, businesses may be subject to the following taxes: – Local governments levy an annual real estate tax on those who own real estate. – When urban real estate is sold, a local tax is imposed on the rise in the value of the land. – The cost of owning a vehicle is subject to a vehicle tax. – The cost of certain works that require town planning licenses is subject to a tax on constructions, installations, and building works. – Fees for waste collection – A temporary tax on large fortunes – Excise tax on non-reusable plastic packaging – Tax on Financial Transactions

Tax treaties

Comprehensive double taxation treaties Spain has comprehensive double taxation treaties with the following countries and jurisdictions: Albania Algeria Andorra Argentina Armenia Australia Austria Azerbaijan Barbados Belarus Belgium Bolivia Bosnia Herzegovina Brazil Bulgaria Cape Verde Canada Chile China Colombia Costa Rica Croatia Cuba Cyprus Czech 2 Dominican Republic East Timor 3 Ecuador Egypt El Salvador Estonia Finland France Georgia Germany Greece Hong Kong Hungary Iceland India Indonesia Iran Ireland Israel Italy Jamaica Japan Kazakhstan Korea Kuwait Kyrgyzstan 1 Latvia Lithuania Luxembourg Macedonia Malaysia Malta Mexico Moldova Morocco Netherlands New Zealand Nigeria Norway Oman Pakistan Panama Philippines Poland Portugal Qatar Romania Russia Saudi Arabia Senegal Serbia Singapore Slovakia 2 Slovenia South Africa Sweden Switzerland Tajikistan1 Thailand Trinidad and Tobago Tunisia Turkey Ukraine1 United Arab Emirates United Kingdom United States Uruguay Uzbekistan Venezuela Vietnam

1 The treaty with the former USSR

2 The treaty with the former Czechoslovak Socialist Republic

3. The treaty with Indonesia Tax Treaties denonuced by the States: Denmark and Turkmenistan Spain has only two agreements covering inheritance (but not gift) taxes.

There are with the following countries: France and Sweden. Spain has also signed new treaties with Bahrain, Montenegro, Namibia, Peru and Siria, but these have yet to take effect. Agreements for administrative cooperation and/or exchange of information Within the European Union, mutual administrative assistance is governed by the Directives on exchange of information (2011/16/EU) as amended, together with its implementing Regulation (Regulation (EU) No 2378/2015, and the recovery of claims relating to taxes, duties and other measures (Directive 2010/24/EU). As regards VAT, the same function is performed by Council Regulation (EU) No 904/2010. Outside the European Union, Spain is a party to the Convention on Mutual Administrative Assistance in Tax Matters, and has a separate agreements on exchange of information with the fllowing countries, as well as the Agreement with the United States of America for the Improvement of International Tax Compliance and the Implementation of the Foreign Account Tax Compliance Act – FATCA: Andorra Gibraltar (United Kingdom) Aruba San Martin 1 Bahamas San Marino Curacao 1 1 Netherland Antilles former Agreement Finally, on 13 December 2021 Spain ratified the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting, done in Paris on 24 November 2016.