SPAIN Law and Practice Contributed by: Raúl Salas and Elena Ferrer-Sama, RocaJunyent
1.4 Applicable Corporate and Individual Tax Rates The standard CIT tax rate is 25% and applies to com - panies with turnover above EUR10 million. However, companies with turnover from EUR1 million to EUR10 million have special tax rates (23% in 2026, 22% in 2027, 21% in 2028 and 20% in 2029 onwards). Com - panies with turnover of up to EUR1 million have spe - cial tax rates (21% in 2026 and 20% in 2027). Special tax rates apply to certain activities – for exam - ple, banking, mining, and oil and gas are subject to a 30% tax rate. Non-profit entities are subject to a 10% tax rate, whereas investment funds and undertakings for collective investment in transferable securities (UCITS) are taxed at 1%. There is a special 15% rate for newly created compa - nies, which is applicable to the first tax period in which profit is obtained and the following period. However, partnerships are transparent for corporate tax purpos - es, so profits and losses are taxed at the partners’ level in proportion to their partnership interests. The income of individuals who own a business (or who are partners in a transparent partnership carrying out business) – whether generated by themselves or through the partnership – could be taxed at a maxi - mum tax rate ranging from 45.5% to 54%, depending on the autonomous community of residence. The taxable profit is the company’s gross income for the tax period, minus certain deductions. It is deter - mined by the annual financial statements prepared in accordance with Spanish generally accepted account - ing principles (SGAAP) that mostly follow international financial reporting standards (IFRS), as adjusted for certain statutory tax provisions. The tax authorities are legally authorised to modify accounting reports in order to determine taxable profit if they consider that the accounting reports have not been calculated according to the SGAAP. 2. Corporate Tax Regime 2.1 Taxable Profits
entities engaged in research, or those exercising lib - eral professions. It enables certain companies to carry out commercial activities that would be impossible to carry out on their own, such as market research, cen - tralised purchasing, sales, information management or administrative services. The AIE has its own legal personality and commercial character. However, it may not hold shares in compa - nies that are members of the AIE – nor may it directly or indirectly manage or control the activities of its members or third parties. This type of entity is used to transfer tax credits to investors in relation to R&D, movies and musical productions. 1.3 Tests for Determining Tax Residence There are three tests for determining whether a com - pany is resident for tax purposes in Spain: • whether the company was incorporated under Spanish law; • whether the registered office of the company is located in Spanish territory; or • whether the place of effective management (ie, direction and control of the company’s activity) is located in Spanish territory. If any of the foregoing requirements is met, the com - pany can be considered resident in Spain. Under certain conditions, Spanish tax authorities can assume that an entity located in a tax haven – or in a country with no taxation – is a tax resident in Spain. In order for this assumption to be applicable, the main assets and rights of the entity must be (directly or indi - rectly) located in Spain or else its main activity must be carried out in Spain. In the case of transparent entities (such as partner - ships), taxation would depend on the partner’s resi - dency. Spanish-resident partners are liable to pay tax in Spain on their share of the worldwide profits of the partnership. Non-resident partners are only liable to pay tax on profits that accrue in Spain.
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