If you want to set up a company in Spain, this article will educate you on the tax laws for a LLC (SL) which is the most common company structure in Spain.
Spain taxes resident companies on their worldwide income. Therefore, from our research, and these things do change, offshore income is subject to Income Tax. The country doesn't have major incentives to transfer in offshore income accrued abroad. Corporate Income Tax standard rate is 25% in Spain. This ranks Spain as 102th overall in terms of corp. taxation rate internationally.
The valued added tax rate in Spain is 21.00%, that ranks Spain as 155th overall with regards to value added tax rate worldwide. In terms of other taxation, an employer will contribute 29.90% to the equivalent of a social security fund and an employee will contribute 6.35%. The overall complexity of the tax system is medium. This is measured by average time to comply with a country's labor tax requirements is as it is 90 hours. Contributing to this is the number of yearly labor tax payments, which is 1 in ES.
Thin capitalisation mandates aren't in play. Thin capitalisation refers to any type of requirements on companies' debt-to-asset ratios.
Dividends received are subject to Corporate Income Tax. However, a participation exemption may apply if parent company holds at least 5% of the payer shares for at least 1 year, and subsidiary is subject to CIT of at least 10%, or holding exceeds €20m and is resident of a country where Spain has concluded a tax treaty with. Dividends are distributions of company earnings, passed by the board, to a class of its shareholders. Dividends can be either cash payments, shares of stock, or other property.
Capital Gains are treated as ordinary income and subject to Corporate Income Tax. However, Capital Gains may be tax-exempt if the aforementioned participation exemption apply. A capital gains tax is levied on the profits that a corporation or natural person realizes when he or she sells sells a capital asset for a price that is higher than the purchase price.
The interest withholding tax rate is estimated at 19%. This means that the taxman expects LLC's to withhold 19% of payments abroad on interests, unless tax is reduced under a tax treaty or exempted under the EU interest directive. The dividends withholding tax rate is 19%. This means that the relevant tax authorities expects relevant legal entities to pay tax on at least 19% of dividends remitted abroad, unless the participation exemption applies or is tax-exempt under the EU parent-subsidary directive or tax is reduced under a tax treaty. The royalties withholding tax rate is 19%. This means that the relevant tax authorities expects LLC's to withhold 19% on royalty payments to non-residents, unless the EU royalties directive applies or tax is reduced under a tax treaty.
There is a tax on individual's net wealth in Spain. There are gift, inheritance, real estate and transfer taxes. We are aware of frequently implemented research and development breaks on taxation in ES.
The above is not tax or legal advice for your individual circumstances. We are able to point you to a lawyer in Spain who can answer all your questions. Contact us today. Click the free consultation button above or press Incorporate now if you are in a hurry.
It takes approximately 33 hours to file and prepare documents for a Spain Civil Law (French).
The corporate tax is approximately 25% which is 103 in the world.
Owners of a company in Spain are not allowed to carry back a loss and may be allowed to carry forward a loss for 100 years.
The vat rate in Spain is 21% which ranks 155 in the world.