Spain

The general CIT rate in Spain is 25%. Other tax rates may apply, depending on the type of company that is taxed and its type of business.

Resident companies are taxed on their worldwide income.

For permanent establishments (PEs) in Spain of foreign companies, non-resident income tax (NRIT) is chargeable on income that may be allocated to the PE at a 25% tax rate.

NRIT is also chargeable on non-established foreign companies/individuals that obtain income in Spain (see the Withholding taxes section).

Small and medium size entities (SMEs) and micro-enterprises companies

With effect for tax periods starting on or after 1 January 2025, a reduction in the tax rate applicable to SMEs (see Special tax regimes in the Tax credits and incentives section) and to micro-enterprises (those with a net turnover in the previous tax period of less than EUR 1 million) is envisaged, although its implementation is expected to be carried out progressively over a period of three years for micro-enterprises and five years for SMEs.

In addition, in the case of micro-enterprises, the tax rate is broken down into two brackets, with a lower rate being levied on the taxable income up to EUR 50,000, when the tax period is one year, or up to the corresponding proportional amount, when the tax period is shorter. Specifically, the tax rates would be as follows:

The above reduced rates will not apply to entities that are considered equity companies.

For corporate groups, the turnover of all group companies must be considered for this purpose. Special rules apply for the first tax period in which an economic activity is carried out or short tax periods.

Tax-protected cooperative entities will be taxed at the tax rates resulting from reducing the previous tax rates by three percentage points, provided that the resulting rate does not exceed 20%, except for non-cooperative results.

Newly created companies

Newly created companies are taxed at a 15% tax rate for both the first tax period in which they obtain a profit and the following tax period. This tax rate is not applicable to equity companies (i.e. companies that do not carry on business activity) or to newly created companies that are part of a national or international group.

The reduced rate may also be inapplicable if the company's business activity was previously carried on by a related company or individual.

Start-up companies

Companies that meet the requirements set forth by the law to qualify as start-ups may apply a 15% tax rate in the first tax period in which the company obtains positive taxable income and in the following three periods, contingent upon maintaining the conditions to qualify as a start-up.

For these purposes, a company will be considered a start-up if the following requirements are met:

• It must be newly created or the public deed of incorporation must have been filed in the pertinent Commercial or Cooperative Registry no more than five years previously (seven years previously for companies in the biotechnology, energy, industrial, and other strategic sectors, or companies that have developed their own technology, designed entirely in Spain).
• It must not have arisen from a merger, spin-off, or transformation of companies that are not considered emerging companies. The terms 'concentration' or 'segregation' are included in the previous operations.
• It must not distribute or have distributed dividends or returns.
• It must not be listed on a regulated stock market.
• Its registered office, company domicile, or PE must be in Spain.
• 60% of its workforce must have an employment contract in Spain. For cooperatives, for the sole purpose of this percentage, working members and partners with whom there is a corporate relationship count as part of the workforce.
• It must be developing an innovative entrepreneurial project with a scalable business model.

When the company belongs to a business group, the group or each member company of the group must meet the above requirements.

Companies that meet the requirements to qualify as start-ups are not entitled to the application of the reduced tax rate when:

• The company ceases to qualify as a start-up or the five-year period or seven-year period from its incorporation has elapsed.
• The company is extinguished.
• The company is acquired by another company that does not qualify as a start-up.
• The company’s net turnover exceeds EUR 10 million.
• The company carries out an activity that causes significant environmental damage in accordance with Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 regarding the establishment of a framework to facilitate sustainable investments and whereby Regulation (EU) 2019/2088 is modified.
• Holders of a direct or indirect interest participation of at least 5% of the share capital or the directors of the emerging company have been convicted via a final judgment of the types of offences envisaged by the Start-up Law.

Minimum CIT rule

A minimum taxation rule will apply to those CIT payers whose net turnover in the 12 months prior to the date in which the tax period begins has been of at least EUR 20 million and for taxpayers who are taxed under the special tax consolidation regime for CIT purposes, regardless of its net turnover amount.

According to this rule, the above-mentioned taxpayers’ CIT net tax due (defined as tax due after applying tax reliefs and deductions) may not be less than the result of applying 15% to the taxable income reduced or increased due to the additions/decreases related to the reserve for the levelling-off tax losses (eligible by small-size entities) and reduced by the special investment reserve of the special economic and tax regime of the Canary Islands.

This measure will have effects for tax periods starting as of 1 January 2022.

The minimum taxation rule will not be applicable to taxpayers taxed under 10%, 1%, or 0% CIT rates nor to listed companies that make investments in the real estate market (called SOCIMIs in Spain).

The following entities have a special minimum tax rate:

• For micro-enterprises, the minimum net tax due will be the result of multiplying their tax rate by fifteen twenty-fifths, rounded up.
• For SMEs, the minimum net tax due will be the result of multiplying the applicable tax rate by fifteen twenty-fifths, rounded up.
• For newly created entities taxed at the special 15% tax rate, the minimum net tax due will be 10% of taxable income.
• For those entities that qualify as credit institutions and those engaged in exploration, research, and exploration of hydrocarbons, the percentage indicated will be an 18% instead of the standard 15%.
• For cooperatives, the minimum net tax due may not be less than 60% of gross tax due.
• For entities in the Canary Islands Special Zone, the positive taxable income used to calculate the minimum net tax due will not include the part of the taxable income corresponding to operations materially and effectively carried out in the Canary Islands Special Zone that is taxed at the special reduced tax rate.

The following rules must be considered while calculating the minimum tax rate:

• Firstly, the gross tax due will be reduced by the amount of the applicable tax reliefs (including tax relief of the special economic and tax regime of the Canary Islands) and tax credit for investments made by port authorities. After that, tax credits for the avoidance of double taxation will be applied, within the limits set forth for all these incentives.
• If after the incentives above have been applied the resulting tax due is under the minimum net tax due calculated according to the above-mentioned rules, then the resulting tax due will be exceptionally considered as the net tax due.
• If after the incentives above have been applied, the resulting tax due is over the minimum net tax due, then any other applicable tax credits will be applied (within the limits set forth for each of them) up to the amount of the minimum net tax due.
• Tax credits under the special economic tax regime of the Canary Islands may be applied within their own limits even if the amount resulting from its application is under the minimum net tax due.
• Incentives not applied due to the application of the minimum net tax due may be applied in the following tax years according to the relevant regulations.

The minimum CIT rule will also apply to NRIT payers that act through a PE in Spain.

Global minimum tax

On 21 December 2024, Law 7/2024 of 20 December 2024, was published in the Official State Gazette (BOE), which, among other things, transposes Council Directive (EU) 2022/2523 in Spain. This Directive and, therefore, the Spanish Law aims to ensure an overall minimum level of taxation for multinational groups and large-scale domestic groups, i.e. it implements the so-called Organisation for Economic Co-operation and Development (OECD) Pillar Two.

The law incorporates a Top-Up Tax that may apply, under certain circumstances, to Spanish entities or PEs of multinational groups and domestic groups with annual consolidated revenue of at least EUR 750 million in at least two of the four preceding fiscal years.

Such a Top-Up Tax, where triggered, aims to reach a minimum 15% effective tax rate in each of the jurisdictions where the in-scope groups have a taxable presence. For the purposes of assessing whether a Top-Up Tax is triggered, the group will need to undertake calculations on a jurisdictional basis (i.e. adopting a blended approach per jurisdiction) to confirm whether the effective tax rate does indeed reach the minimum 15% and no Top-Up Tax arises or whether, on the contrary, such a minimum rate is not obtained and a Top-Up Tax needs to be paid.

Generally, for the purposes of calculating the effective tax rate obtained within a given jurisdiction, the following formula needs to be considered:

Effective tax rate = Adjusted covered taxes of the constituent entities in the jurisdiction / net qualifying income of the constituent entities in the jurisdiction

To this end, both the adjusted covered taxes and the qualifying income of the relevant entities need to be calculated following the relevant adjustments provided in Law 7/2024.

The Spanish Law, in line with the Directive, provides the following three kinds of Top-Up Tax:

Primary Top-Up Tax - Income Inclusion Rule (IIR)

The Law provides for a Primary Top-Up Tax that generally applies to parent entities (the ultimate parent entity [UPE], intermediate parent entity [IPE], or partially owned parent entity [POPE]) located in Spain with respect to low-taxed constituent entities located abroad.

The Primary Top-Up Tax applies to fiscal years beginning on or after 31 December 2023.

Secondary Top-up Tax - Undertaxed Profits Rule (UTPR)

The Spanish Law also provides for a Secondary Top-Up Tax that results from the application of the UTPR. This Top-Up Tax is generally levied where there are no parent entities within the group collecting the Top-Up Tax that is due under the IIR in connection with low-taxed constituent entities existing within the given group.

The Secondary Top-Up Tax applies to fiscal years beginning on or after 31 December 2024.

Domestic Top-up Tax - Qualified Domestic Minimum Top-Up Tax (QDMTT)

The Law also introduces the Domestic Top-Up Tax that applies to low-taxed constituent entities located in Spain. This is intended to qualify as a QDMTT as per the OECD standards.

The Domestic Top-Up Tax is applicable to fiscal years beginning on or after 31 December 2023.

Safe Harbours

The Spanish Law provides for the application of Transitional Safe Harbour, in line with OECD Transitional Country-by-Country Safe Harbour, applicable to fiscal years beginning no later than 31 December 2026.

During this period, no Top-Up Tax will be due concerning a given jurisdiction if any of the following three tests are met for such a jurisdiction:

• De minimis test. Generally, this test is met if (i) the amount of the group's revenue in a jurisdiction, as obtained from a Qualified Country-by-Country Report, is less than or equal to EUR 10 million and (ii) the profit before tax in that jurisdiction, as obtained from a Qualified Country-by-Country Report and adjusted by a net unrealised fair value loss exceeding EUR 50 million, is less than or equal to EUR 1 million. Also, the test is deemed met if the jurisdiction is in a loss position or has no profit before tax.
• Simplified effective tax rate test. This test is met if the simplified effective tax rate in the jurisdiction is equal to or higher than the transitional rates of 15% for 2024, 16% for 2025, and 17% for 2026. The simplified effective tax rate is obtained by dividing the simplified covered taxes (i.e. mainly, income tax expense reduced by non-covered taxes and uncertain tax positions) recorded in the entities' financial statements by the profit before tax obtained from a Qualified Country-by-Country Report and adjusted by a net unrealized fair value loss exceeding EUR 50 million.
• Routine profits test. This test is met if the profit before income tax in a jurisdiction, as obtained from a Qualified Country-by-Country Report and adjusted by a net unrealised fair value loss exceeding EUR 50 million, is less than or equal to the amount of the substance-based income exclusion. Generally, the substance-based income exclusion will be calculated by multiplying the salary expenses and the net value of tangible assets in a jurisdiction by the percentages provided for each of these items in 2024, 2025, and 2026. Also, the test is deemed to be met if the jurisdiction is in a loss position or has no profit before tax.

Further, Spanish law provides for the application of the QDMTT Safe Harbour and other safe harbours to be developed by the OECD.

Please also refer to PwC’s Pillar Two Country Tracker.

Business and professional activities tax

The business and professional activities tax is a local direct tax levied annually on the performance in Spain of business, professional, or artistic activities, whether or not they are carried out on particular premises. The tax payable depends on different factors, such as the type of activity carried on and the location and size of the premises where the activity is carried on. As regards limits, the tax may not exceed 15% of the presumed average profits of the business/professional activity.

CIT payers and non-resident companies carrying on an activity in Spain through a PE are exempt from this tax if their net turnover for the tax year of the last CIT/NRIT return filed prior to the date of accrual of the local tax (1 January) was less than EUR 1 million.