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Learn about the tax management of a company in Spain

How is the profit of a company taxed in Spain?

The positive net income obtained by the companies is subject to corporate income tax.  The taxable base of this tax is the accounting result, on which the corrections established by the tax regulations must be made (the so-called accounting adjustments). Therefore, accounting is not only an essential tool to obtain an approximation of the financial and equity situation of the company, but is also the main element to stablish the profit that will finally determine the tax cost in the corporate income tax.

The company pays Corporate Tax on all the worldwide net income obtained by the company located in Spain, whether obtained inside or outside the Spanish territory, although international double taxation treaties ratified by Spain must be taken into account.

The result subject to taxation (so-called the taxable base) is the difference between income and expenses. Negative results obtained in previous years may be deducted from this base.

The tax rate most frequently applicable to commercial companies 25 percent, although there is a reduced tax rate of 15 percent for newly created entities. From 2023 onwards, the tax rate for entities whose net turnover of the immediately preceding tax period is less than 1 million euros will be 23 percent.

The management of Corporate Tax is carried out through an annual statement. However, in the months of April, October and December of the current year, three payments must be made on account of the tax, which is calculated on the basis of the result of the previous year or, if the company chooses to do so, based on the result of the year itself.

How does indirect taxation affect companies?

Companies are also subjecto to Value Added Tax (VAT) and, unless some objective or subjective exemption applies to them, they must file the mandatory returns to manage this tax, which may be quarterly or, eventually, monthly, in the latter case through Immediate Supply of Information to the Spanish Tax Administration (SII) system.

Are there other obligations?

In addition, the company may be obligued to file another informative statements, which are different depending on the activity and operations carried out by the company in particular, such as the annual VAT summary, the annual statement of customers and suppliers, the recapitulative statements of intra-community operations , etc.

Eventually, the company must carry out the management of withholdings, in the event that the tax regulations assign it the status of withholder agent with respect to certain income (property leasing, payment of salaries, etc.).

In addition to the above obligations, the company must take into account the existence of local taxes, such as the tax on economic activities (Impuesto sobre Actividades Económicas), which it will only be obliged to pay if its turnover exceeds the amount of one million euros.

Now that you have all the information, you can start your business in Spain. The first step to success with a company in Spain is to rely on a good professional services company.
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