Value-added tax (VAT)
Spanish VAT is payable on supplies of goods and services carried out in Spanish VAT territory and on imports/intra-EU acquisitions of goods and services. There are three rates for the different types of goods and services, which are as follows:
- Ordinary rate of 21%, applied on regular supplies of goods and services.
- Reduced rate of 10%, applied on basic necessities (e.g. food and agricultural products not included in the ‘super reduced’ 4% rate, dwellings, other qualifying services). Live cultural events and cinema tickets are taxed at the reduced rate of 10% too.
- Super reduced rate of 4%, applied on basic necessities other than those classified under the reduced rate (e.g. bread, milk, books, medicine).
In the Canary Islands, a specific tax is applied instead of VAT, called the Canary Island General Indirect Tax (IGIC). The ordinary IGIC rate is 7%, and the other IGIC rates are 0%, 3%, 9.5%, and 15% (20% for tobacco). IGIC is similar to VAT, with some significant differences. Imports of tangible goods into the Canary Islands are subject to this tax.
In Ceuta and Melilla, sales tax is applied instead of VAT.
Many goods imported into Spain from outside the European Union are subject to customs duties. The rates are established by the EU’s Common Customs Tariff and vary widely.
Excise duties are chargeable on most hydrocarbon oil products, alcoholic drinks, and tobacco products imported into or produced in Spain. Some examples are: (i) most road fuels, approximately EUR 0.38 per litre; (ii) cigarettes, approximately EUR 24.7 per thousand plus 51% of the maximum retail price (with a minimum tax of EUR 131.5 per 1,000 cigarettes, which is increased to EUR 141 if the retail price is less than EUR 196 per 1,000 cigarettes); (iii) tobacco, approximately EUR 23.5 per kg plus 41.5% of the maximum retail price (with a minimum tax of EUR 98.75 per kg, which is increased to EUR 102.75 if the retail price is less than EUR 165 per kg); (iv) most wines, EUR 0 per litre; and (v) spirits, approximately EUR 9.59 per litre of pure alcohol included.
Tax on non-reusable plastic packaging (Plastic Packaging Tax)
On 1 January 2023, the Plastic Packaging Tax entered into force. The taxable event is the manufacture, intra-EU acquisition, and import of non-reusable plastic packaging. The definition seems to be quite broad as it would include any kind of packaging containing plastic, including packaging for containing, protecting, distributing, or handling goods.
The tax rate is EUR 0.45 per kilogram of plastic included in such packaging.
If the packaging is manufactured within Spain, the taxpayer will be the manufacturer, who will have to charge the Plastic Packaging Tax on the first supply of the packaging. In the case of the introduction of non-reusable plastic packaging via intra-EU acquisition or import, the taxpayer will be the entrepreneur or entity performing the intra-EU acquisition or import, who will have to pay the Plastic Packaging Tax via the filing of specific periodical returns (for intra-EU acquisitions of plastic packaging or goods containing plastic packaging) or the import Single Administrative Document (SAD) (for imports of plastic packaging or goods containing plastic packaging).
Different tax benefits can be applied depending on the specific circumstances, including the following, among others:
- Recycled plastic contained in the packaging would not be subject to the payment of the Plastic Packaging Tax.
- Plastic packaging sent outside Spanish territory (via intra-EU supplies or exports) can benefit from tax exemptions, deductions, or refunds.
- If a threshold of 5 kilograms per month is not exceeded in terms of the amount of plastic packaging introduced into Spain, the tax would not be due.
- Plastic packaging for certain products (e.g. medicines, healthcare products, inks, varnishes) can qualify for tax relief.
- Destruction or return of plastic packaging before its use.
For the effective application of the tax benefits, certain conditions have to be met and evidence should be provided to the tax authorities when necessary.
Tax on tax-haven-resident companies owning real estate in Spain
Companies resident in a tax haven for tax purposes that own real estate or hold real property rights in Spain are subject to a special levy accrued on 31 December and declared and paid in January of the following year in the place and manner established by law. The tax is 3% of the assessed value of the real estate.
A transfer tax, which is usually 6% to 11%, depending on the region, is generally levied on inter vivos transfers, including real estate transfers and real estate leases that are exempt from VAT.
Second and subsequent transfers of buildings are exempt from VAT; consequently, they are, in principle, subject to transfer tax.
Residential leases are exempt from VAT and therefore subject to transfer tax.
Transfers of listed or unlisted securities are, in principle, exempt from both transfer tax and VAT. This exemption does not apply for transfers of unlisted securities of a company on a secondary market that tries to evade the tax payable on a direct transfer of real estate that it owns. For this purpose, Spanish law establishes certain cases where it is understood that there is an intention to evade tax.
This exception does not apply to transfers of securities received as a result of the incorporation by banks of asset management companies and to transfers of securities of banks affected by the integration plans regulated by Law 9/2012, which will therefore be exempt from transfer tax. In addition, acquisitions of assets in the Canary Islands may be exempt from transfer tax (and from IGIC) when certain requirements are complied with.
Restructuring transactions are also exempt from transfer tax. For this purpose, mergers, spin-offs, exchanges of shares, and certain in-kind contributions are considered to be restructuring transactions.
Stamp duty is mostly levied on notarial instruments and records documenting transactions that have an economic value and need to be registered in public registries (e.g. company, land, and industrial property registries). Stamp duty is incompatible with transfer tax and capital duty, but compatible with VAT. The general rate is between 0.75% and 1.5%, depending on the region of Spain and with special rates for different taxable events.
Stamp duty is also levied on certain commercial (e.g. bills of exchange, promissory notes), court, and administrative documents.
A 1% capital duty is levied on capital reductions and company dissolution and is payable by the shareholders.
Capital duty is incompatible with transfer tax and stamp duty in certain cases, but it is compatible with VAT.
Employers are required to withhold a percentage of their employees’ salaries and benefits as a payment on account of their personal income tax (PIT). The rate of withholding is a progressive rate of between 19% and 47%, depending on the employee’s personal circumstances and income.
Social security contributions
Employers are required to pay social security contributions. The rate of the contributions under the general social security contribution regime is the fixed rate of 30.40% plus a variable rate for occupational accidents (e.g. 1.5% for office work).
Employees are also required to pay social security contributions. Under the general social security contribution regime, the rate of social security contributions is 6.45%. Employers should deduct this amount from the amounts that they pay to employees.
The rates of social security contributions stated above should be applied on the employee’s total monthly gross employment income, whether in cash or in kind, with a minimum monthly contribution base of between EUR 1,260 and EUR 1,759.50, depending on the employee’s professional category, and a maximum monthly contribution base of EUR 4,495.50.
Both parts of the social security contributions (employer and employee) should be paid by the employer to the Social Security Treasury.
Tax on the provision of certain digital services
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.
Tax on financial transfers
Onerous acquisitions of shares in listed Spanish companies with a capitalisation value at 1 December in the year prior to the acquisition of over EUR 1 billion are subject to the indirect tax on financial transfers.
The tax rate is 0.2% and is levied regardless of the place of residence of the parties or where the transaction takes place. Certain exemptions are established that mainly affect the primary market and the acquisitions necessary for the operation of market infrastructures, those relating to business restructurings, those made between companies of the same group, temporary assignments, and certain acquisitions of own shares.
Temporary levy on energy
The temporary levy on energy has been established for financial years 2023 and 2024. During the last quarter of 2024, the government will study its effects and will consider whether to make it permanent.
The temporary levy on energy will be charged to the main operators in the energy sectors and to individuals or entities involved in crude oil or natural gas production, coal mining, or oil refining in Spain, with certain exemptions. The levy will be 1.2% of the net turnover derived from the activity carried out in Spain for the year before the one in which the payment obligation arose, paid in advance. It will not be considered a deductible expense for CIT purposes. The levy may not be economically passed on, either directly or indirectly.
In the case of tax groups for CIT purposes, the net turnover considered will be the sum of the turnover of the group’s member entities.
Temporary levy on credit institutions and financial credit institutions
The temporary levy on credit institutions and financial credit institutions have been established for financial years 2023 and 2024. During the last quarter of 2024, the government will study its effects and will consider whether to make it permanent.
The temporary levy on credit institutions and financial credit institutions applies to credit institutions and financial credit institutions operating in Spanish territory whose sum of interest income and commissions for the year 2019, determined in accordance with their applicable accounting regulations, is equal to or greater than EUR 800 million.
In the case of tax groups for CIT purposes, the income considered will be the sum of the income of the group’s entities. The levy will be 4.8% of the sum of the net interest income and commission income and expenses derived from the activity carried out in Spain, payable in advance. The levy will not be considered a deductible expense for CIT purposes and may not be economically passed on.
In addition to the taxes stated above, the following local taxes may be charged on companies:
- Real estate tax, levied annually by the local authorities on the ownership of real estate.
- Local tax levied on the increase in the value of urban land, chargeable when urban real estate is sold.
- Motor vehicle tax, charged on the ownership of vehicles.
- Tax on constructions, installations, and building works, charged on the cost of certain works that require town planning licences.
- Waste collection fees.