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Spain

Taxes

Updated 09/2012

We all help meet public sector expenditure through our taxes. Enterprises are also obliged to pay tax.

In Spain there are various levels of public authority: State, Autonomous Communities (regions) and local authorities. The various public authorities can impose taxes in accordance with their competencies. They are set out in the general taxation laws and the regulations governing the various taxes and levies. Are you familiar with them? Find out information and perform procedures online via the following links.

Legal requirements

General State Administration

At the State level, enterprises will be subject to any of these taxes:

  • Personal Income Tax (IRPF): this applies to sole traders who are not capital companies and are resident in the country. They have a simplified schedule to facilitate compliance with taxation obligations. One tax return is required per year, or each quarter depending on the case in question.
  • Corporation Tax: levied on the profits of enterprises which have the legal status of commercial capital companies resident in the country. This involves one annual tax return following conclusion of the financial year.
  • Non-Resident Income Tax: levied on the profits of non-resident business owners earned in Spain. An annual or individual tax return is likewise required.
  • Tax onAssets: levied on the assets of natural persons, on 31 December. Those resident in Spain. Non-residents pay only on the assets they hold in Spain.
  • Economic activities tax (IAE): levied on enterprises engaged in an economic activity. An exclusion applies to enterprises during the first two years of operations, and natural persons. Also companies with a turnover of less than 1,000,000 euros. Depending on the type of activity, this will be national, provincial or local.
  • Valued Added Tax ('IVA'): as in other European countries, this is levied on the consumption of goods and services by the end consumer. Businesses and professionals apply the tax. They charge consumers the VAT payment and then deposit this with the tax office. Businesses are required to present tax returns and settlements each quarter in most cases, or on occasion monthly.
  • Special taxes: these are levied on the consumption of certain products such as alcohol, tobacco, fossil fuels and others consumed by end consumers. They are applied by the enterprises which manufacture, import or sell the goods. Enterprises declare the sums and deposit them.
  • Customs: duties on imports from outside the European Union.

The public tax offices use an enterprise's accounts to establish its economic and equity situation and calculate the taxes it must pay. Certain mandatory accounting obligations and others connected with invoices are therefore established.

To begin with, enterprises with workers on their payroll will be required to apply a Personal Income Tax withholding. In other cases there may be advance payments of Corporation Tax.

Autonomous Communities

The Autonomous Communities, or Regions, have their own public finance office. Most of the Autonomous Communities (regions) have the general system of financing.

Each Autonomous Community has responsibility for the following State taxes within its territory: tax on inheritance and donations and asset transfer tax and stamp duty Asset Tax.

The Autonomous Communities may also establish their own taxes within the limits laid down in law. Some Autonomous Communities, for example, have introduced taxes to protect the environment, or otherwise levies on fuel consumption.

Meanwhile, there are special taxation systems for some Autonomous Communities: Navarre and the Basque Country have a special taxation system for historical reasons. The Canaries, Ceuta and Melilla also each have their own taxation system because of their geographical location.

Local authorities

Local authorities have financial independence, their own finance office, and very limited competencies to impose taxes or levies. These include in particular the following:

  • Economic Activities Tax
  • Tax on real estate properties: levied on properties and payable by the owners.
  • Tax on motor vehicles: levied on the ownership of cars and other vehicles. This is payable by the vehicle owners.
  • Tax on constructions, installations and works: levied when these are executed. This must be paid by the party performing the works.
  • Tax on the increase in the value of urban land: levied on capital gains from the sale of urban land or properties.

If you would like to find out more about local taxes, consult this website.

 

Administrative procedures

In Spain many procedures with public authorities can be performed in a simple and convenient manner online. Information, forms and procedures are available without identification. To perform some procedures, however, the interested parties must present identification using passwords, an electronic certificate or an electronic ID Card.

When you set up an enterprise or engage in economic activity in Spain, you must register with the census of businesses. This serves to identify enterprises and their employees.

During the lifespan of an enterprise there are a number of taxes affecting its economic activities in each case.

At the State level, tax returns and payments must be processed with the State Tax Agency.

In some cases taxes must be paid to the Autonomous Communities (Regions). To obtain information and perform online procedures with the Autonomous Communities, consult this link:

As a business owner you must pay certain local taxes. To obtain information or perform online procedures you can turn to their websites or otherwise go to the town hall in person.

Upon closure of operations at an enterprise, it must deregister from the State Tax Agency's census of professionals, sole traders or companies.

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