Setup your Business in Spain
Spain taxation system:
Spain is divided into 12 autonomous regions, and taxes are split between state and regional governments, with each autonomous region deciding on its own tax rates and liabilities. The tax year runs from 1 January to 31 December.
The general rate of company taxation in Spain is 25 percent from 2016, which is reduced from 28 percent previously in 2015. Newly formed companies pay 15 percent for the first two years of business. Company tax returns must be filed within six months and 25 days after the end of the accounting period. Payment is by instalments in April, October and December, each instalment usually being 18 percent of the tax liability.
General type of Taxes in Spain:
Income tax – IRPF
VAT – Impuesto sobre el Valor Añadido (IVA)
Property tax – Impuesto sobre Bienes Inmuebles (IBI)
Tax on investment income
Services for Companies and professionals (Self-employed) in Spain:
As being an international accountant, we are highly confident to offer following services to individuals and companies throughout our affiliates in Spain. Our Affiliates are full authorised agent of Spanish tax agency known as “Aagencia Tributaria”.
General type of Taxes in Spain:
Value added tax (also known as IVA)
Informative tax returns and Annual Summary VAT Return
Income tax (also known as IRPF)
Obligations as a tax withholder
Tax Registers, NIF (Personal Tax ID) and tax address
Economic Activities Tax
Get information about limits on cash payments
One-stop of the Directive of Services
Entities in the income allocation system
Leaflet “Economic Activities. Fiscal duties of employers and resident professionals in Spanish territory”
Statistical obligations: INTRASTAT return for trade and services between EC member states
Spain has signed many treaties with other countries to avoid double taxation (i.e. paying tax in your home country and in Spain). For an up-to-date list of treaties, please contact us.
Income tax for non-residents
As from 2015, the general flat tax rate for non-residents is 24 percent and 19 percent if you are a citizen of an EU/EEA state.
Special tax regime for people working on assignment in Spain
There is a special tax regime for foreigners coming to work in Spain on an employment contract with a Spanish company. This is sometimes known as ‘Beckham’s Law’ as it was allegedly set up so that footballer David Beckham did not have to pay tax on his worldwide image rights when he came to play for Real Madrid in 2003.
Under the regime, you are only taxed in Spain on Spanish income at a rate of 24 percent up to EUR 600,000 (2015 and 2016). Over EUR 600,000 the 2015 rate is 47 percent and will drop to 45 percent in 2016. There’s no capital gains tax payable on interest outside of Spain.
If you are a Spanish tax resident (spending more than 183 days a year in Spain) and have not been resident in Spain in the last 10 years, you can apply to be taxed under this regime within six months of arriving in Spain. You can get reduced taxation for up to five years.
VAT in Spain
There are three levels of VAT (value-added tax) or Impuesto sobre el Valor Añadido (IVA):
IVA general – 21 percent on goods and services.
IVA reducido – 10 percent on medical/pharmaceuticals.
IVA superreducido – 4 percent on food essential foods and newspapers.
Taxes on property
If you own a property in Spain and are living in it on 1 January in any given year, you will be liable to pay a local property tax called Impuesto sobre Bienes Inmuebles (IBI). The amount is the rental value multiplied by a tax rate set by the local authorities. This applies to non-residents and residents. There is also basura, a rubbish collection tax. Non-resident property owners may also need to pay ‘imputed income tax’ at flat rates on potential rental income on Spanish property.
If you sell a property in Spain, you have to pay a property transfer tax, Impuesto Transmisiones Patrimoniales (ITP). When a property is sold, the local authority charges a tax on the increase in value of the land, the plus valia.
Capital gains, inheritance and gift tax and wealth tax
Capital gains tax (the tax paid on profits from selling property or other investments) has been cut from 21 percent to 20 percent in 2015 and will fall to 19 percent in 2016. If you bought the property before 1994 you may be liable to pay more tax than before as taper tax on capital gains tax has been abolished.
The rules regarding inheritance and gift tax (also called succession tax) have now changed so that non-residents from within the EU/EEA are treated the same as residents. Previously, non-residents were charged around 80 percent more than residents. Now the rate is around 1–7 percent for all (depending on region). If you have paid the higher rate in the past, you may be entitled to a refund.
If your wealth is over EUR 700,000 you will be liable for wealth tax of 0.2–2.5 percent on net assets: residents pay tax on world-wide assets, while non-residents pay Spanish assets only.
You should seek our specialist advice on these taxes as the system is complex.