Income
Tax
Company Tax
Rates And Allowances
Property Related Tax
UK-Spain Double Tax Treaty
Notes on company tax in Spain for the year ended 31st December 2010
Major types of limited company in Spain
Major
types of limited company in Spain
SA-
Public Limited Company
Minimum 25% paid up share capital.
Minimum 60,121 Euros authorised share capital.
SL- Private Limited Company
Minimum share capital 3,006 Euros.
Legal
obligations
All companies must submit annual accounts to its shareholders for
approval. These must be approved within six months from the end
of accounting period.
The audit limit is around 2.5 million Euros turnover.
All companies need to submit annual accounts to the Mercantile Registry (Registro Mercantil).
Tax rates
The full rate of company tax in
Spain is 30%.
For small and medium sized companies, there is a reduced
rate:
25% for profits up to 120,202 Euros, 30% for profits above this.
A company is defined as small or medium sized
if the net turnover in the previous year was less than approximately 3
million Euros.
Payment
of Company Tax
The company tax return must be filed within 6 months and 25 days after
end of accounting period.
Payment by
instalments of company tax is in April, October and
December.
As a general rule, each instalment is 18% of the previous year's company tax liability.
A separate method of calculation applies to large companies whose turnover in the previous year exceeds a set limit.
Calculation
of taxable income
The Starting point is net profit
per accounts, calculated in accordance with the
Plan General de Contabilidad).
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Depreciation must be within prescribed limits. See Rates and Allowances.
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Goodwill amortisation is allowable.
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Movements in the following provisions are allowable for tax purposes:
Doubtful debts, legal expenses, stock obsolescence, devaluation of securities, extraordinary repairs, unsold publications. -
There is no distinction between long and short term gains.
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Tax losses can be carried forward for up to 10 years.
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Penalties and fines.
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Corporation tax payments.
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Gifts and donations other than to specifically approved organisations.
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Expenditure on improvement and enhancement of capital assets.
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Depreciation over maximum prescribed rates (unless it can be proved that this was the actual depreciation).
Capital Gains
Capital gains made by companies are
taxable as part of profits.
Group relief
A
consolidated tax return may be filed if an election is made
before start of tax year.
Only resident companies with a resident Ultimate Holding Company are
included.
This election needs to be renewed every 3
years.
There must be a 90% direct or indirect ownership
for whole of both the current and prior tax year.
Rollover
relief
This is available for reinvestment
in the same kind of asset, between one year before and three years
after disposal.
Tax is paid equally over either the seven following years, or the
actual depreciation period.
The new asset must be kept for seven years, or for its useful life if this is shorter.
These notes are intended as a
guideline and should not be used as a substitute for proper
professional advice. Please contact
us
and we will be happy to assist you.