Spanish tax rates and allowances 2008. Tax rates Spain.

rates and allowances 2008

Income Tax
Company Tax
Rates And Allowances
Property Related Tax
UK-Spain Double Tax Treaty

Income Tax Rates 2008
From (euro)	To (euro)	State %	Local %	Total %
0	17,707	15.66	8.34	24
17,707	33,007	18.27	9.73	28
33,007	53,407	24.14	12.86	37
53,407	+	27.13	15.87	43

Capital gains for individuals

The rate of taxation is 18%.

Company Tax Rates

Please see our company tax page.

Regime for small companies (turnover less than 1.5m euro)

Free amortisations:

Investments which increase no of personnel Assets worth less than 601 euro

Increased amortisations:

New fixed assets, maximum depreciation multiplied by 1.5

Bad debt allowance:

1% of trade debtors

Permanent rollover relief:

For reinvestment in same class of asset, 1 year before to 3 years after disposal

Wealth Tax (Patrimonio) Calculated on individual basis First 108,182 euro is not taxable for residents Also 150,253 euro exemption on main home for residents
From (euro)	To (euro)	%	Cumulative Tax (euro)
0	167,129	0.20%	334
167,129	334,247	0.30%	836
334,247	668,500	0.50%	2,507
668,500	1,337,000	0.90%	8,523
1,337,000	2,673,999	1.30%	25,904
2,673,999	5,347,998	1.70%	71,362
5,347,998	10,695,996	2.10%	183,670
10,695,996+		2.5%

Allowable Depreciation Straight line method can be used for any depreciable asset. Reducing balance method can be used for new tangible assets with estimated useful life of at least 3 years
	Maximum straight Line rate %	Maximum Useful Life years
Buildings and other constructions	3	68
Tools	30	8
Motor vehicles	16	14
Fixtures & Fittings / Office Equipment	10	20
Machinery	12	18
Computers	26	10
Depreciation must be recorded in accounts to be deductible. And within above limits, except: Accelerated allowance may be granted for new assets located in Spain, where it can be demonstrated that actual depreciation took place.

Other significant taxes

Tax on holding companies of Spanish real estate resident in non-treaty countries:

Penalty tax at 3% Cadastral value

Capital Gains Indexation Allowances for tangible fixed assets
Date Of Purchase	Companies	Individuals
Before 1984	2.1967	Reduction in indexed gain of 11.1% for each year or part year owned before 31/12/96 (applies to non-residents as well)
1984	1.9946
1985	1.8421
1986	1.7342
1987	1.6521
1988	1.5783
1989	1.5095
1990	1.4504
1991	1.4008
1992	1.3698
1993	1.3519
1994	1.3275	1.2405 and previous years
1995	1.2744	1.3106
1996	1.2137	1.2658
1997	1.1866	1.2405
1998	1.1712	1.2165
1999	1.1631	1.1946
2000	1.1572	1.1716
2001	1.1334	1.1486
2002	1.1197	1.1261
2003	1.1008	1.1040
2004	1.0902	1.0824
2005	1.0758	1.0612
2006	1.0547	1.0404
2007	1.0320	1.0200
2008	1	1

Income Tax Declaration threshold

If either of the limits below are exceeded, the taxpayer must file an annual tax return.

- Income from employment 22,000 euro
- Capital gains and savings income 1,600 euro
- Rental income 1,000 euro

VAT (IVA)

Standard rate (Tipo General):                                     16%
Reduced rate (Tipo Reducido)                                    7%
Super-reduced rate (Tipo Superreducido)                4%

Payment is quarterly, in general within 20 days of month end
A monthly regime applies for businesses with turnover above 6 million euro.

There is a pro-rated partially exempt calculation for businesses making both taxable and exempt supplies.

Exemptions

Public services
Financial transactions
Public postal services
Insurance Transactions
Medical and health service
Conveyance of land designated as not for housing
Welfare
Resale of property
Education
Private lettings
Sport
Exemptions for internal transactions
Certain cultural activities
Exemptions for exports

Deductibility of VAT

VAT incurred in relation to taxable goods and services is recoverable

Non-recoverable VAT

50% of motor vehicle cost.
Travelling expenses which are not deductible for corporation or income tax purposes.

Special Systems

If turnover less than 200,000 euros the sistema de estimacion objetiva may be used.
Agriculture, stock breeding and fishing
Second-hand goods, art objects and antiques
Travel agents
Retail trade - recargo de equivalencia - net VAT per model paid to suppliers, not Hacienda

VAT on property
New homes	7% 1%	VAT AJD (stamp duty)
Second hand homes	7%	ITP (property transfer tax)
Commercial premises & plots Villa plots from promoter	16% 1%	VAT AJD
ITP/ AJD rates can vary according to area (Comunidad Autonomo).

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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