The corporate income tax (“el impuesto de sociedades” or IS) in Spain is a tax liability levied on commercial businesses and legal entities located in Spain. The taxation rules for these entities define a tax burden that varies depending on the core business activity. Business owners and accountants need practical and updated information to effectively manage their tax liabilities. Keep reading to see our complete guide to the corporate income tax in Spain: what it is, who must declare it, when it has to be paid, how the payment amount is calculated, and what recent changes have been made.

What’s in this article?

• Who has to declare corporate income tax?
  
• When to declare corporate income tax?
  
• Corporate income tax rates
  
• How the corporate income tax affects businesses
  
• What’s new for the corporate income tax in 2023-24
  
• How to automate tax processes
  

Who has to declare corporate income tax?

The types of businesses that must declare corporate income tax in Spain are:

• Commercial businesses (SL, SA, UTE)
  
• Business partnerships (such as investment funds, pension funds, and corporate funds)
  
• Agrarian societies and economic interest groups (AIE)
  
• Associations and foundations (including nonprofit organizations and educational establishments)
  

All businesses registered in Spain must declare corporate income tax. This includes commercial businesses that did not generate a profit in the last tax period or that are in a sales or liquidation process. However, not all businesses have to pay the same tax liability, as there are different tax rates and deductions for some businesses. For example, entities engaged in development and technological innovation and research may receive incentives.

The only entities exempt from the corporate income tax are Spain’s Autonomous Communities, government agencies, and local and State entities. Some examples are the Bank of Spain, museums, and social security services.

When to declare corporate income tax?

Taxpayers must file a separate tax return at the close of every tax period. Often, tax periods end with the calendar year on December 31 and do not exceed 12 months. Typically, annual returns must be filed within 25 calendar days after six months from the end of the tax year. For instance, if a business’s tax year is the same as the calendar year, the business must file its tax return by July 25. However, your business’s particular situation could result in a tax period not coinciding with the end of the calendar year.

These are the rules for the end of the tax period:

• Closing of an entity: When the business is canceled in the Mercantile Register, you must file the tax return within 25 calendar days after six months from the cancellation. For example, if your business cancels its registration on January 31, the tax return would be due in the first 25 days of August.
  
• Changing of the business’s residency from Spain to a different country: Moving your business to another country is considered a closing of the tax period, so you will have to file a corporate tax return.
  
• Changing of statute or legal framework: Changing the statute or legal framework of the business could change the business’s tax liability. This change therefore requires closing the tax period and a separate tax return.
  

If you would like more information about taxpayer deadlines, you can download the Tax Agency’s 2024 calendar.

Corporate income tax rates

The corporate tax rate (also known as the “cuota tributaria” or tax liability) is 25%. The Spanish Tax Agency (AEAT) uses the term “sujeto pasivo” or taxpayer to define who must pay or declare taxes. To estimate taxes, you’ll have to identify the percentage assigned to your taxpayer type.

Percentages for different taxpayers:

• Businesses or taxpayers that do not exceed €1 million in tax benefit or positive tax base will have a reduced rate or 23%.
  
• New entities may have a reduced tax liability of 15% during the first tax period.
  
• Fiscally protected cooperatives will have a tax liability of 20%.
  
• Nonprofit foundations pay a reduced tax rate of 10%.
  
• Entities in the Canary Islands Special Zone (ZEC) have a tax rate of only 4%.
  
• Investment and regulatory funds pay 1%.
  
• Pension funds pay 0%.
  

You can check the Tax Agency’s website to get the full list of tax liabilities for every type of entity.

How the corporate income tax affects businesses

Any significant change to the business will affect the denomination given by the Tax Agency (e.g., the AEAT could consider—or no longer consider—a business to be a “new creation,” “cooperative,” or “nonprofit” depending on changes to its structure). Because of this, you will have to close a tax period whenever there is a change to the business’s tax regime, such as: a change to its legal formation, a change in residence to another country, or a close of the entity, to name just a few.

One advantage is that businesses can deduct expenses to lower their tax basis. The tax basis is the tax benefit the business has recorded during the previous tax period or calendar year. The most commonly deducted expenses include those related to production and delivery of products, business or website maintenance, staffing, and marketing.

Note that failing to comply with tax liabilities could cause the business to receive fines or penalties. These unplanned expenses could affect the business’s current situation as well as its future growth, so it is extremely important to be very clear and current with the business’s tax and accounting processes, and to declare its tax rate every year. Nowadays, there are tools for automating several of these processes to help you ensure compliance.

At Stripe, we've created a revenue and finance automation solution to help you simplify tax obligations and make sure your company stays compliant.

What’s new for the corporate income tax

In 2023, the most significant change to the corporate income tax was the reduced tax rate for owners of small businesses mentioned in the previous section: the general tax rate (i.e., for businesses with a tax base under €1 million) has been brought down from 25% to 23%. This is good news for small businesses that could help incentivize their growth.

Another change to the Corporate Income Tax Law (LIS) involved investment in new electric vehicles. Businesses can now write off the purchase of new electric vehicles twice as quickly as normal.

Finally, the minimum tax payable will be 10% of the tax basis for new entities taxed at 15%. The tax payable is the tax liability that includes all the taxpayer’s obligations, such as payments on account, withholdings, and tax installments. The following entities will not pay the minimum tax payable:

• Nonprofits, which pay 10% tax
  
• Mutual funds, which pay 1%
  
• Pension funds, which pay 0%
  
• Real estate investment trusts (SOCIMIs)
  

We hope that this overview of the most important elements of corporate tax helped you better understand how to handle your company's tax obligations. While we have tried to include the most relevant concepts and regulations, note that tax laws are periodically updated: if you have questions on how any of the specifics of Spanish corporate tax may affect your business, check in with your tax advisor.