Corporate tax in Spain Copyright
Corporate tax, also called company tax, is called Impuesto sobre Sociedades, or IS in Spanish. The Spanish Companies Act provides for many types of companies, the common ones being limited liability companies (SL) or limited companies (SA). Regardless of the type of company, it is required by law to file a corporate tax return.
In addition to corporate tax, a company may be involved in other taxes such as rent tax retention, VAT etc.
Related articles: Taxes Spanish companies need to pay
Corporate tax rate
The corporate tax rate is fixed 25%, regardless of the profit.
Note: In order to promote entrepreneurship, the tax office only levies a 15% tax rate on new companies in the first year of profitability and in the following year.
Example 1: The company loses money in the first and second year, and only starts making profits in the third year. The first two years are free of tax, the third and fourth years are taxed at 15% and the fifth year is 25%.
Example 2: The company starts making profits in the first year, loses money in the second year, and makes a profit in the third year. The company pays 15% in the first year, no tax in the second year, and 25% in the third year.
In simple terms, the taxable base for corporate tax is the company’s net income, i.e., gross income minus deductible expenses. Expenses that are generally related to the company’s line of business are deductible.
Example: A company has a gross income of 100,000 Euros, expenses of 70,000 Euros and a net income of 30,000 Euros. Then it will have to pay a tax of 7,500 euros.
When do I have to declare corporate tax?
Corporate tax returns, as advance payment, are filed 3 times a year, in the first 20 days of April, October and December.
In July of the following year, you have to file an annual tax return, in which you declare all your income for the whole previous year. For example, the annual tax for the year 2022 has to be filed by July 25, 2023.
Tax Return MODELO 200 and MODELO 202
Corporate tax returns need to be filed on the official forms designated by the tax office. The MODELO 202 filing form is required for quarterly tax returns and the MODELO 202 filing form is required for annual tax returns. Both forms can be completed and submitted online.
Annual corporate accounts
In addition to the corporate tax, companies are required to produce annual accounts every year. The purpose of the annual accounts is for other people to know the company’s financial situation, not for taxation purposes. Therefore, the annual accounts are not directly related to taxation.
Related article: Spanish company annual accounts
