Business development and management solutions in Spain

Fiscal considerations

Companies must present their company tax declaration (Impuestos de Sociedades) seven months after the year end, and this is frequently used by banks as a source of financial information on their clients rather than audited accounts. Company tax rates are similar to the rest of Europe, and tax losses may be recovered over the next fifteen years. Advance corporation tax is payable three times a year for companies who made a profit the year before.
VAT declarations (IVA) must be made monthly for large companies, and quarterly on a calendar basis for smaller enterprises. The current VAT rate is 16%, although a lower rate of 7% is applied to some items. Payment to tax authorities should be made within 20 days of the period end. Other declarations (intrastat etc) are similar to the rest of Europe. Companies must also file details of all sales and purchases with local companies which exceed €3,000 in a calendar year.
Companies must register their businesses for Economic Activity Tax (IAE). The tax is administered by the autonomous authorities, and is payable annually based on a list of tariffs adjusted by local coefficients (although many small businesses are now zero rated).
Tax is retained at source on company payrolls (IRPF), and paid over to the tax authorities on a quarterly basis. Rates vary according to the salary and the personal circumstances of the employee. In the case of non resident employees, tax is deducted at a rate of 24%, which can normally be offset in the declaration of world wide income in the country of residence. Non residents with an economic interest in Spain have to apply for a tax registration number (NIE).
Other taxes. Withholding tax is payable on dividends at a rate of 18%, although exemptions are made for dividends paid up to companies in certain circumstances. Retentions are also deductible on invoices from registered professionals (e.g. lawyers) and for rented property. Other local authority taxes are payable for vehicles, refuse removal, maintenance of sidewalks etc.