You have a business idea, a growing company or an international team, and Spain looks like the right place to build it. But before the first invoice goes out, one question tends to decide how profitable the whole project will be: how much of what you earn actually stays in your company? Is the rate the same for a new start-up and an established firm? Do small businesses get a lighter treatment, and are there incentives that most newcomers never hear about?
Then come the questions that rarely appear in the first conversation with an advisor. What counts as a deductible expense, and what will the tax authority challenge? When are the deadlines, and what happens if you miss one? And if your company operates in several countries, which one gets to tax your profits?
Whether you are launching a Sociedad Limitada, opening a branch of a foreign company or running a business as a freelancer, understanding corporate taxation before you register can shape your structure, your cash flow and your growth. This guide walks you through the essentials, one clear step at a time. And when you want the full picture of how Spain taxes foreign residents and businesses, our pillar guide, Spain Tax Guide for Foreigners, is the natural next stop.
What Is Corporate Tax in Spain?
Corporate Income Tax (Impuesto sobre Sociedades, IS) is a direct tax on the profits of companies and other legal entities in Spain. It is calculated on the net taxable profit of each tax period, not on turnover, so a company that sells a lot but earns little pays little. The tax is managed by the Agencia Tributaria and applies at national level, which means that, unlike personal income tax, the rate does not change from one region to another (the Basque Country and Navarre have their own foral systems).
It is also important to separate it from other taxes a business faces. VAT (IVA) is charged on sales, payroll taxes apply to employees, and individuals who work as freelancers (autónomos) pay personal income tax (IRPF), not corporate tax.
Who Has to Pay Corporate Tax in Spain?
The tax applies to entities with legal personality and to some entities without it, depending on their residence. Most commercial companies are covered, including limited companies (Sociedad Limitada, SL), public limited companies (Sociedad Anónima, SA), cooperatives, foundations and many associations.
Spanish-Resident Companies
A company is considered resident in Spain if it meets any of these conditions:
- It was incorporated under Spanish law
- Its registered office is in Spain
- Its place of effective management is in Spain
Resident companies are taxed on their worldwide income, and may be able to reduce double taxation through exemptions or credits for foreign income already taxed abroad. Note that a foreign company can be treated as resident if it is actually managed from Spain.
Non-Resident Companies Operating in Spain
Foreign companies with a permanent establishment (establecimiento permanente) in Spain, such as a branch, office or construction site, are taxed on the profits attributable to that establishment, usually through the non-resident income tax (IRNR) rather than the corporate tax. Foreign companies with no permanent establishment are generally taxed only on specific Spanish-source income, such as rents or royalties, with possible reductions under double tax treaties. Whether a presence in Spain creates a permanent establishment is a technical question, so review it before operating.
What Is the Corporate Tax Rate in Spain?
The general rate is 25% of taxable profit. Several reduced rates exist for specific situations:
| Type of Company | Rate |
|---|---|
| General rate | 25% |
| Newly created companies (first profitable years) | 15%, applied to the first two tax periods with positive taxable income |
| Micro-enterprises (turnover under €1 million) | Gradually reduced rates, currently around 21% to 22% on the first €50,000 of profit |
| Small and medium-sized companies | Reduced progressive rates in 2025 and 2026 under recent reforms |
| Banks and oil and gas companies | 30% |
| Cooperatives | 20% (on cooperative results) |
| Certain non-profit entities | 10% |
Reforms approved in recent years have introduced progressive rates for smaller companies, and the figures phase in over several years, so confirm which rate applies to your size and tax year. Large groups may also face a minimum effective tax rate.
How Is Corporate Taxable Income Calculated?
The starting point is the accounting profit in the company’s financial statements, prepared under Spanish accounting rules. The company then makes tax adjustments (ajustes extracontables), adding expenses that are not tax-deductible and subtracting income that is exempt or already taxed. The result is the tax base (base imponible), which can be reduced by tax losses from earlier years, within legal limits. The tax rate is then applied, and credits, deductions and prepayments reduce the final amount.
Deductible Business Expenses
An expense is generally deductible when it is linked to the business activity, correctly recorded in the accounts and backed by a valid invoice. Common examples include:
- Salaries and social security contributions
- Rent, utilities and office supplies
- Professional fees (lawyers, accountants, consultants)
- Depreciation of assets, within the official tables
- Marketing, advertising and travel expenses with business purpose
- Interest on loans, subject to limits
Non-Deductible Expenses
Some costs are not deductible even if they are in the books. The main examples are:
- Corporate income tax itself and tax penalties or surcharges
- Fines and sanctions
- Gifts and donations (apart from certain incentives for approved entities)
- Payments to related parties in tax havens, unless proven to be real and justified
- Expenses that are not documented or not related to the activity
- Excessive hospitality expenses beyond the legal limit
What Tax Deductions and Incentives Are Available to Businesses?
Spain offers several ways to reduce the final corporate tax bill, either by lowering the taxable base or by deducting amounts directly from the tax due. The most relevant ones for investors and entrepreneurs include:
- R&D and innovation credits: companies that invest in research, development and technological innovation can claim tax credits, with higher percentages for qualifying R&D expenses.
- Capitalization reserve (reserva de capitalización): a reduction of the tax base when part of the profit is kept in reserves for a minimum period.
- Leveling reserve (reserva de nivelación): available to small companies, allowing them to reduce the tax base and offset it against future profits.
- Hiring incentives: credits or social security reductions for employing people with disabilities or from specific groups.
- Tax losses carried forward: losses from earlier years can offset future profits, within limits tied to the company’s size.
- Audiovisual and film production credits: available for qualifying productions in Spain.
- Regional incentives: some regions offer additional deductions or grants.
Most incentives require strict documentation, minimum holding periods or prior certification, so plan them before the end of the tax year.
Corporate Tax for Small and Newly Established Companies
Smaller and younger companies receive more favorable treatment, which makes the choice of structure especially relevant at the start.
A newly created company can apply a reduced 15% rate in its first profitable tax period and the following one, provided it carries out a genuine economic activity and is not part of a group that simply reorganizes existing activity. Micro and small businesses, defined mainly by turnover (under €1 million for micro-enterprises and under €10 million for the small-company regime), may also benefit from progressive reduced rates that are being phased in under recent reforms. Small companies can use simplified accounting options and the leveling reserve mentioned above.
| Benefit | Who Can Use It | Key Condition |
|---|---|---|
| 15% rate | New companies | First two profitable periods, real activity |
| Reduced progressive rates | Micro and small companies | Turnover limits apply |
| Leveling reserve | Small companies | Funds must be offset against future profits |
| Accelerated depreciation | Small companies | Specific asset types and limits |
Because the figures and thresholds are updated frequently, confirm the rate that applies to your size and tax year before preparing your projections.
How Does Corporate Tax Work for Foreign-Owned Companies?
A Spanish company owned by foreign shareholders is taxed in the same way as any other Spanish company. Foreign ownership does not create a separate rate, and the company is taxed on its worldwide profits as a Spanish tax resident. What changes is the surrounding framework:
- Dividends paid to foreign owners: these are generally subject to withholding tax, which may be reduced under double tax treaties or the EU Parent-Subsidiary Directive, when conditions are met.
- Related-party transactions: loans, services or royalties between the Spanish company and its foreign owners must follow market prices (transfer pricing), supported by documentation.
- Interest and financing: deductions for interest paid to related entities are subject to limits.
- Beneficial ownership: the company must report its ultimate beneficial owners in the relevant registry.
- Foreign investment screening: certain sectors and larger non-EU investments may require government authorization.
Proper structuring from the start helps you avoid double taxation and unexpected withholding.
Corporate Tax for Non-Resident Businesses in Spain
A foreign company does not pay Spanish corporate tax simply by selling to Spanish customers. Taxation depends on whether it has a taxable presence in the country.
The main trigger is the permanent establishment (establecimiento permanente), generally a fixed place of business such as an office, branch, factory or workshop, or a dependent agent who habitually concludes contracts on behalf of the company. Construction or installation projects may also qualify after a certain duration. If a permanent establishment exists, the profits attributable to it are taxed in Spain, usually under the non-resident income tax (IRNR) rules, at rates similar to those of resident companies.
Without a permanent establishment, the company is generally taxed only on specific Spanish-source income, such as royalties, interest, dividends or rents, usually through withholding at source. Double tax treaties often reduce or eliminate these withholdings and define the permanent establishment more narrowly than domestic law. Remote work and digital activity can also create risks, since employees working from Spain may, in some cases, create a taxable presence for the foreign employer. Review this carefully before hiring staff in Spain.
What Is the Spanish Corporate Tax Filing Process?
Corporate tax follows an annual cycle, with returns filed after the year closes and partial payments made during the year. Most companies use a calendar tax year, from 1 January to 31 December, though some choose a different period that must match their accounting year.
Annual Corporate Tax Return
The annual return is filed electronically through the Agencia Tributaria using Modelo 200. The deadline is the 25 days following the six months after the end of the tax period, which for a calendar-year company means 1 to 25 July. The process generally follows these steps:
- Close the accounts and prepare the financial statements.
- Approve the accounts at the shareholders’ meeting, generally within six months of year-end.
- Make the tax adjustments to reach the taxable base.
- Apply credits, deductions and prepayments to calculate the final amount.
- File Modelo 200 and pay any balance due.
The annual accounts must also be filed with the Commercial Registry (Registro Mercantil) within one month of their approval. Filing late can trigger surcharges and penalties, so many companies work with a gestoría or accountant to manage the calendar.
Advance Tax Payments
During the year, most companies make three advance payments (pagos fraccionados) using Modelo 202, in April, October and December. These are paid in the first 20 days of each month. The amount is calculated either on the tax due for the last closed year or on the profit earned so far in the current year, depending on the method that applies. Companies with turnover above €10 million generally must use the profit-based method and may face minimum payment rules.
| Filing | Form | Typical Timing |
|---|---|---|
| Annual corporate tax return | Modelo 200 | 1 to 25 July (calendar-year companies) |
| Advance payments | Modelo 202 | 1 to 20 April, October and December |
| Annual accounts filing | Registro Mercantil | Within one month of approval |
What Accounting Records Must Spanish Companies Keep?
Spanish companies must keep accounts that give a true and fair view of their finances, following the Spanish General Accounting Plan (Plan General de Contabilidad, PGC). The main requirements include:
- Journal and ledger books: the daily book (libro diario) and the inventory and annual accounts book (libro de inventarios y cuentas anuales), which are legalized with the Commercial Registry, normally online.
- Annual accounts: balance sheet, profit and loss account and notes to the accounts, with a statement of changes in equity and cash flow statement for larger companies.
- Invoices and supporting documents: issued and received invoices, which must meet legal requirements to support VAT and expense deductions.
- Tax records: VAT books, payroll records and fixed asset registers.
- Corporate books: minutes of shareholder meetings and the shareholder register (libro registro de socios).
Records must generally be kept for at least six years under commercial law, and tax records may be reviewed for four years, with longer periods in specific cases. Electronic invoicing and verifiable invoicing software rules are being phased in, so confirm which obligations apply to your business.
How Does VAT Differ From Corporate Tax in Spain?
The two taxes are often confused, but they work differently. Corporate tax is charged on the profit of the company, while VAT (Impuesto sobre el Valor Añadido, IVA) is a consumption tax charged on sales and ultimately paid by the end customer. Businesses collect VAT on behalf of the tax authority and can generally recover the VAT they have paid on business purchases.
| Aspect | Corporate Tax (IS) | VAT (IVA) |
|---|---|---|
| Taxed on | Net taxable profit | Sales of goods and services |
| Who bears it | The company | The final consumer |
| General rate | 25% (reduced rates may apply) | 21% general, 10% and 4% reduced |
| Filing frequency | Annual, with advance payments | Usually quarterly (Modelo 303), monthly for larger companies |
| Main form | Modelo 200 | Modelo 303 and annual summary (Modelo 390) |
A company can owe VAT even when it makes a loss, and it can owe corporate tax on profits even if its VAT balance is zero. Some activities, such as certain financial, medical and educational services, are exempt from VAT. For the complete framework, read our pillar guide, Spain Tax Guide for Foreigners. Because deadlines, rates and invoicing rules change often, have a Spanish tax advisor verify the details before publishing.
Corporate Tax and Dividends in Spain
Corporate tax is paid by the company on its profits, and a second layer of tax appears when those profits are distributed to shareholders. This is often called economic double taxation, and it is why the structure of ownership matters.
How the dividend is taxed depends on who receives it:
| Recipient | General Treatment |
|---|---|
| Spanish-resident individual | Taxed as savings income in the IRPF, with rates generally from 19% to 30% |
| Non-resident individual | Withholding of 19% (a lower rate may apply under a double tax treaty); EU/EEA residents may also claim certain exemptions |
| Spanish company shareholder | Often a 95% exemption on dividends from qualifying holdings, usually 5% or more |
| Foreign company shareholder | Withholding tax, possibly reduced or eliminated by a treaty or the EU Parent-Subsidiary Directive |
Companies must retain the applicable withholding and file it with the Agencia Tributaria. Dividends can only be paid from distributable profits, after covering the legal reserve (reserva legal), which requires 10% of profit until it reaches 20% of share capital. To claim treaty benefits, foreign shareholders usually need a tax residency certificate from their home country.
Corporate Tax for Autónomos: Do Self-Employed People Pay It?
No. Autónomos are individuals, so they pay personal income tax (IRPF) on their business profits, not corporate tax. The difference is important when choosing a structure:
- Autónomo: profits are added to your other income and taxed at progressive IRPF rates. You are personally liable with your own assets, and you pay monthly social security contributions.
- Sociedad Limitada (SL): the company pays corporate tax on its profits, and liability is generally limited to the share capital. You can pay yourself a salary, and take dividends, each with its own tax treatment.
As a rule of thumb, an SL tends to become more attractive as profits rise, since the corporate rate can be lower than your marginal IRPF rate, but it brings higher administrative costs. The right choice depends on profit level, risk, and plans for growth, so run the numbers with an advisor before registering.
What Happens If a Company Does Not Pay Corporate Tax on Time?
Late compliance has a cost, and the amount depends on whether you act before or after the tax authority contacts you.
- Voluntary late filing (before any notice): a surcharge (recargo) of 1% for each full month of delay, rising to 5%, 10%, 15% or 20% depending on the delay, plus late-payment interest after 12 months.
- After a notice or audit: penalties and interest apply, and the surcharges for voluntary filing no longer count.
- Incorrect or incomplete returns: fines generally range from 50% to 150% of the unpaid amount, depending on severity.
- Failure to file the annual accounts: the Commercial Registry may block the company’s registry certificates and impose fines.
- Serious cases: large tax fraud can lead to criminal liability for directors.
If you find an error, correct it as soon as possible with a complementary or rectifying return, since early voluntary correction normally reduces the penalties.
Corporate Tax Planning for Businesses in Spain
Legitimate tax planning means using the rules as they were designed, with proper documentation and a real business purpose. It is different from tax evasion or artificial schemes, which can lead to penalties. The main factors to consider include:
- Choosing the right structure: SL, branch or autónomo, based on profits, liability and international operations.
- Timing of income and expenses: planning investments and bonuses before the year-end.
- Using available incentives: R&D credits, reserves and the reduced rates for new and small companies.
- Managing losses: carrying forward losses to offset future profits within the legal limits.
- Related-party transactions: setting arm’s-length prices and keeping the documentation up to date.
- Dividend and salary mix: balancing company profits and personal income for the owner.
- Treaty planning: applying double tax treaties correctly for cross-border payments.
Review your position before year-end, not after, since many options cannot be applied retroactively.
Corporate Tax for Foreign Entrepreneurs: Key Considerations
Foreign entrepreneurs face the same corporate tax rules as Spanish ones, but a few issues deserve extra attention:
- Structure: decide whether to create a Spanish SL, open a branch or work through a foreign company, as each has a different tax and legal impact.
- Permanent establishment risk: activities in Spain can create a taxable presence for a foreign company even without a formal branch.
- Tax residency of the owner: moving to Spain can make you a tax resident, which changes how dividends, salary and foreign income are taxed. See our related guide on tax residency in Spain.
- Setup requirements: you need an NIE, a Spanish bank account and, for an SL, a deed before a notary and registration in the Commercial Registry.
- Immigration rules: owning a company does not give you the right to live or work in Spain, so check your visa or residence route.
- Compliance calendar: returns, advance payments, VAT filings and accounts have fixed deadlines.
- Local support: a Spanish advisor or gestoría helps you avoid mistakes with language, forms and deadlines.
Planning these points before incorporation is usually cheaper than correcting them later.
Summary
Corporate Income Tax (Impuesto sobre Sociedades) is charged on the net taxable profit of companies in Spain, not on turnover. The general rate is 25%, with reduced rates for newly created companies, micro and small businesses, and higher rates for specific sectors such as banks and oil and gas companies. Spanish-resident companies are taxed on their worldwide income, while foreign companies are generally taxed only on the profits of a permanent establishment or on specific Spanish-source income.
Taxable profit starts from the accounting result and is adjusted for deductible and non-deductible expenses, then reduced by tax losses, credits and incentives such as R&D credits and the capitalization reserve. Most companies file Modelo 200 each July, make advance payments in April, October and December, and must keep proper accounting records and file their annual accounts with the Commercial Registry. Late or incorrect filings bring surcharges, interest and penalties, so a compliance calendar is essential.
Foreign entrepreneurs should also consider the structure (SL, branch or autónomo), permanent establishment risk, dividend withholding and their own tax residency. Early planning, supported by a Spanish tax advisor, is usually cheaper than correcting mistakes later.
Frequently Asked Questions About Corporate Tax in Spain
What is the Corporate Tax rate in Spain?
The general rate is 25% of taxable profit. Newly created companies can apply a reduced 15% rate in their first two profitable tax periods, micro and small companies may benefit from reduced progressive rates, and banks and oil and gas companies pay 30%. Confirm the rate that applies to your size and tax year.
Who has to pay Corporate Tax in Spain?
Companies and other legal entities resident in Spain, such as limited companies (SL), public limited companies (SA), cooperatives and foundations. A company is resident if it is incorporated under Spanish law, has its registered office in Spain or is effectively managed from Spain. Non-resident companies are taxed on the profits of a permanent establishment, usually through the non-resident income tax.
Do foreign-owned companies pay Corporate Tax in Spain?
Yes. A Spanish company with foreign shareholders is taxed like any other Spanish company, on its worldwide profits, and foreign ownership does not create a different rate. What changes is the surrounding framework: dividend withholding, transfer pricing on related-party transactions, interest deduction limits and beneficial ownership reporting.
Do autónomos pay Corporate Tax?
No. Autónomos are individuals and pay personal income tax (IRPF) on their business profits, plus monthly social security contributions. Corporate tax applies only to companies, such as an SL, which pay tax on their profits and can then pay the owner through salary or dividends.
When does a company have to file Corporate Tax in Spain?
For companies with a calendar tax year, the annual return (Modelo 200) is filed from 1 to 25 July. Advance payments (Modelo 202) are made in April, October and December, during the first 20 days of each month. Annual accounts must also be filed with the Commercial Registry within one month of their approval.
Are dividends taxed separately from Corporate Tax?
Yes. The company pays corporate tax on its profits, and a second layer of tax applies when profits are distributed. Spanish-resident individuals pay IRPF on dividends as savings income, generally between 19% and 30%. Non-resident shareholders usually face a 19% withholding, which a double tax treaty may reduce, and companies holding qualifying stakes often benefit from a 95% exemption.
Please have a Spanish tax advisor verify the reduced rates, the filing deadlines and the withholding percentages before publishing, since they change often.
