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 2008
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
As of 1st January 2008, 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).
-
Depreciation must be within prescribed limits. See Rates and Allowances.
-
Goodwill amortisation is allowable.
-
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.
-
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.
-
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.
Capital
gains relief
The
previous provision allowing for a deferral of the capital gain has been
abolished. Instead, there is a one off tax credit. This is currently 20% of
the capital
gain.
The proceeds of the sale can be reinvested in any class of asset, e.g. property or land used in an economic activty, or a greater than 5% holding in another company.
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.
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