Thinking of opening a company in Spain or already running one with foreign shareholders? Then understanding Impuesto sobre Sociedades — Spain’s corporate income tax — is essential.
This guide covers:
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Who must pay corporate tax
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Tax rates for Spanish companies
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Deductions and credits
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Filing requirements
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How foreign-owned entities are taxed
👥 Who Pays Corporate Tax in Spain?
Corporate tax applies to:
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Spanish resident companies (incorporated or managed from Spain)
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Branches of foreign companies with activity in Spain
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Some non-resident entities with income sourced in Spain
🧾 If your company has a permanent establishment (PE) in Spain, it’s subject to corporate tax on income generated in Spain.
💶 What Is the Corporate Tax Rate in Spain?
| Company Type | Tax Rate |
|---|---|
| General corporate rate | 25% |
| Newly created companies (first 2 years with profits) | 15% |
| Banks and oil/gas companies | 30% |
| Nonprofits (special regime) | 10% or exempt |
👩💼 Most startups and SMEs will pay 25%, with 15% offered as an incentive for new businesses.
📉 Allowable Deductions & Credits
Spanish companies can deduct expenses that are:
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Directly related to the business
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Properly documented
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Accounted for in the books
✅ Common deductible expenses:
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Salaries and social security contributions
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Rent and utilities
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Professional services and legal fees
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Travel, IT, and telecoms
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Depreciation of fixed assets
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Interest payments
💡 R&D credits and reinvestment incentives are also available under certain conditions.
🗓️ Filing Corporate Tax: Modelo 200
All resident companies and PEs must:
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File an annual corporate tax return (Modelo 200)
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Submit quarterly tax prepayments (Modelo 202)
| Return Type | Deadline |
|---|---|
| Annual (Modelo 200) | Within 25 days of 6 months after fiscal year-end (usually July 25) |
| Quarterly advance (Modelo 202) | April 20, Oct 20, Dec 20 |
📌 Corporate tax returns are separate from VAT or income tax filings.
📊 Example: Spanish Subsidiary
A UK parent company sets up a Spanish SL (Sociedad Limitada).
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It has an office in Madrid
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Generates €300,000 in annual profit
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Declares €70,000 in deductible expenses
Taxable profit: €230,000
Corporate tax @25% = €57,500
🏦 Branch vs Subsidiary: Tax Differences
| Feature | Branch (Sucursal) | Subsidiary (SL or SA) |
|---|---|---|
| Legal personality | No (extension of parent) | Yes (separate entity) |
| Tax status | Pays tax on Spanish income only | Pays tax on global income (if resident) |
| Reporting requirements | Simpler | Full Spanish accounts, audit (if required) |
| Liability | Parent company liable | Limited liability |
👥 A subsidiary offers more autonomy and tax planning flexibility, especially for EU businesses.
🌍 Avoiding Double Taxation
Spain has Double Taxation Agreements (DTAs) with over 90 countries, allowing:
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Tax credits for foreign taxes paid
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Exemptions on certain cross-border dividends
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Withholding tax reductions on royalties and interest
📌 Check whether your country has a DTA with Spain to prevent being taxed twice.
🛡️ Staying Compliant as a Foreign-Owned Business
To avoid penalties:
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Keep accurate books and Spanish-language accounts
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Maintain a registered tax address in Spain
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File Modelo 200 and Modelo 202 on time
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Submit annual accounts to the Registro Mercantil (Companies Registry)
💼 Having a Spanish tax advisor is essential for non-resident company owners.
⚖️ Need Corporate Tax Help in Spain?
At Borderless Lawyers, we help:
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Set up SL companies or Spanish branches
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Handle quarterly filings, bookkeeping, and Modelo 200
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Maximize deductions and R&D credits
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Structure tax-efficient operations for foreign shareholders