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 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).
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.
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 newly created entities taxed at the special 15% tax rate, the minimum net tax due will be 10% of the 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 taken into account 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.
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.