With over 300 days of sunshine a year in many regions and various tax advantages, Spain is becoming increasingly attractive to European entrepreneurs. However, the reality is that relocating one’s personal or business base requires careful tax planning.
One of the key considerations is Spain’s corporation tax, which raises many questions for those making the move. With special regulations for start-ups, and designated economic zones such as the ZEC in the Canary Islands, Spain offers quite favourable tax conditions for European entrepreneurs willing to take the leap across the Pyrenees.
Due to the corporate tax reform, there will also be further tax relief for micro-enterprises, small businesses, and tax-protected cooperatives starting in 2025. This article provides a detailed look at the conditions and intricacies of corporation tax in Spain.
Content
- Who has to pay corporation tax in Spain?
- Avoiding double taxation – Double taxation agreements
- What is the tax rate?
- Special regulations
- When is corporation tax collected in Spain?
- Corporation tax in Spain – Secure tax benefits with the right advice
Who has to pay corporation tax in Spain?
Any company with its legal or actual centre of business in Spain is required to pay corporation tax. Under Spanish law, a company is liable for taxation in Spain if it meets any of the following conditions:
The corporation tax (Impuesto sobre Sociedades) applies to all legal entities in Spain, particularly:
- Limited companies (e.g. Sociedad Limitada – SL, Sociedad Anónima – SA)
- Subsidiaries of foreign companies with a permanent establishment in Spain
- Cooperatives and other legal entities
- Non-resident companies if they generate income in Spain or maintain a permanent establishment there
One crucial point to note: It’s not just the formal company headquarters that determine tax liability, but also the place of effective business management. Even if your company is officially registered in another European country, you may still be subject to Spanish corporation tax if key business decisions are made there.
Self-employed individuals (Autónomos) are not subject to corporation tax in Spain. Instead, they fall under personal income tax (IRPF).
Avoiding double taxation – Double taxation agreements
Entrepreneurs from Europe operating in Spain need not worry about being taxed twice. Spain has a double taxation agreement (DBA) with many European countries, including Britain and the Netherlands, to prevent exactly that.
The agreement regulates:
- Where specific types of income are taxed.
- Tax credits or exemption methods to avoid double taxation.
This means that profits generated and taxed in Spain are either exempt or credited against tax liabilities in Britain or the Netherlands.
For businesses with international operations or those establishing subsidiaries, careful tax planning is essential for a smooth and successful start. Our experts at Global Tax Saving provide in-depth advice on the advantages of corporation tax in Spain and other key aspects of the Spanish tax system.
What is the tax rate?
The standard corporate tax rate in Spain is 25%. This rate serves as the default and applies to companies that do not fall under the definitions of micro-enterprises or small businesses. And there is good news: From 2025, reduced tax rates will apply to micro and small businesses due to the new corporate tax reform. You can read more details further down in the article.
For entrepreneurs planning a fresh start in Spain, the reduced tax rate of 15% for start-ups can be a major advantage. This reduced rate applies for the first two profitable years, offering significant financial relief during the critical early stages of business.
There are also further exceptions for specific sectors:
- Listed collective investment institutions, including real estate funds, are subject to just 1% corporation tax.
- Protected cooperatives benefit from a 20% tax rate.
- Oil and gas exploration and extraction companies face the highest standard tax rate of 30%.
- Listed real estate investment companies (SOCIMIs) are taxed at 19%.
For large, non-resident companies that generate income in Spain, the 25% tax rate also applies—but only on profits earned within Spain.
Additionally, for private individuals moving to Spain alongside their business, the Lex Beckham regime offers a flat income tax rate of 24% on earnings up to €600,000, making relocation even more attractive.
Special regulations for micro-enterprises (Revenue < 1 Million Euros)
Before the reform, which applied in the financial years 2023 and 2024, micro-enterprises were taxed at a corporate tax rate of 23%. From 2025 onwards, these companies will benefit from a further, gradual reduction in tax rates, depending on the amount of the tax base.
For the part of the tax base up to €50,000, the following rates apply:
- 21% in 2025
- 19% in 2026
- 17% from 2027 onwards
For the part of the tax base exceeding €50,000, the tax rates are as follows:
- 22% in 2025
- 21% in 2026
- 20% from 2027 onwards
Special regulations for small businesses (Revenue between 1 and 6 Million Euros)
Small businesses with revenue between 1 and 6 million euros will also benefit from a reduction in the corporate tax rate starting from the financial year 2025. While the rate before the reform was 25% (up to and including the 2024 financial year), it will be gradually reduced over five years to 20% in 2029.
The specific tax rates are defined as follows:
- 24 % im Jahr 2025
- 23 % im Jahr 2026
- 22 % im Jahr 2027
- 21 % im Jahr 2028
- 20 % ab dem Jahr 2029
The gradual reduction of the corporate tax rate for small businesses by a total of 5 percentage points over a period of five years offers these businesses predictable relief. This strengthens their competitiveness and creates incentives for further growth and investment.
Save taxes through a special zone in the Canary Islands
The Zona Especial Canaria (ZEC) on the Canary Islands offers an exceptional opportunity for tax optimisation. Qualified businesses can benefit from a significantly reduced corporation tax rate of just 4%.
To take advantage of this attractive 4% tax rate, companies must meet several requirements: The business must be newly established and have both its registered office and actual business address within the ZEC zone on the Canary Islands.
Registration in the official ZEC Business Register (ROEZEC) is mandatory, and at least one managing director must be a resident of the Canary Islands. In addition, minimum investments in tangible assets are required—€100,000 on the main islands of Tenerife and Gran Canaria, or €50,000 on the smaller islands.
Within six months of approval, businesses must create at least five jobs on the main islands and three jobs on the smaller islands, which must be maintained throughout the entire ZEC membership. Furthermore, the company’s purpose must fall within the economic activities approved by the ZEC.
When is corporation tax collected in Spain?
Corporation tax in Spain is collected on an annual basis, with companies required to make regular advance payments. These payments, known as “Pagos fraccionados”, are due three times a year—on 20th April, 20th October, and 20th December of the current financial year.
The tax is calculated based on either the previous year’s profits or the company’s current earnings. The final tax settlement takes place with the year-end payment, which must be made by 25th July of the following financial year. At this stage, the final calculation is conducted, which may result in either an additional tax payment or a refund, depending on the previous instalments paid.
Corporation tax in Spain – Secure tax benefits with the right advice
Spain’s tax legislation is constantly evolving, with incentives for sustainable investments and innovative businesses being continuously expanded. The corporate tax reform in Spain from 2025 brings a gradual reduction in tax rates for micro-enterprises and small businesses, while the general rate of 25% remains unchanged.
The changes, to be implemented by 2029, aim to reduce the tax burden for these types of businesses, stimulate investment, and continue to make starting new businesses attractive. At Global Tax Saving, we bring 30 years of experience in Spanish tax and legal consultancy to guide you through every stage of your company’s relocation. Whether you need assistance with official procedures, business incorporation, or bespoke tax strategies, we’ve got you covered.
Start preparing your company’s move to Spain today—with a partner who takes care of every detail. Get in touch with us for personalised advice.
