Spanish Corporate Income Tax: A Comprehensive Guide
IMP.SOCIEDADES
Direct, Personal, and Subjective Nature
This legal entity enforces the taxable event. Objective: Charged on corporate income and other legal entities.
Scope
Applies throughout the Spanish territory, subject to provincial tax regimes (Navarre and the Basque Country), in accordance with Article 96 EC. If there is no treaty, Spanish tax law applies.
Chargeable Event
The chargeable event is the act of obtaining income, whatever its source or origin, by the taxpayer residing in Spain for more than half of the year.
Estimated Income
Disposals of property and rights are presumed paid at market value unless proven otherwise.
Allocation of Income
- Civil Societies: Whether or not they have legal personality.
- Inheritance: Inheritance can be testate (with a will) or intestate (without a will). The law provides action to prevent injustice and forced acceptance of inheritance.
- Community Property: Ownership of property. Static tenure situation. Not designed for the purpose of civil society work.
- Particular: Provide elements for a society. The risk is not limited to the transfer.
The revenue allocation scheme does not apply to agricultural processing companies, which are taxed under corporate income tax.
Debtor
Taxpayers residing in Spanish territory:
- Legal persons, other than civil societies with special income arrangements.
- Investment funds.
- Joint ventures.
- Venture capital funds (high-risk funds for participating companies to buy).
Fiscal Residence and Address
Entities meeting one or more of the following requirements:
- Incorporated under Spanish law.
- Head office in Spanish territory.
- Place of effective management in Spanish territory (where the direction and control of all activities are situated).
The tax residence of taxpayers residing in Spanish territory will be their home. Otherwise, the place of management or direction will be considered. The tax residence can be established where the highest value of fixed assets is located.
Exemptions
The following are exempt from tax:
- The State, autonomous communities, and local public administrations.
- The Bank of Spain, guarantee funds, deposit and investment guarantee funds.
- Agencies administering Social Security.
- The Institute of Spain and the Spanish Royal Academy.
Partially exempt entities include nonprofit institutions, foundations, unions, mutual accident societies, professional associations, and political parties.
Concept and Determination of Taxable Base
BI = Number expressing the level of income. The taxable amount is determined by the direct estimation method (IG) and objective assessment as determined by law (the indirect subsidiary).
- Direct:“Objective estimation ingresos_gastos” BI is wholly or partly determined by applying signs, indices, or modules (objective estimation). This method does not reflect the real economic capacity of the taxpayer and avoids costing indirect taxation (lawyer, manager, economist). Taxpayers have an obligation to keep tax accounting to calculate the BI.
Corrections of Value: Depreciation
Depreciation is the accounting expression for the loss of value of fixed assets. Expenses are tax-deductible in terms of tax law.
Depreciation expenses are tax-deductible when they reflect the actual depreciation suffered by individual parts due to operation, use, enjoyment, or obsolescence.
Depreciation is effective when:
- Applying straight-line amortization tables officially approved.
- Applying a constant rate based on the outstanding value.
- Applying the digit method (setting numbers to a plan formulated by the taxpayer and accepted by the tax authorities).
- The taxpayer substantiating the amount.
Nondeductible Expenses
The following are not considered tax-deductible expenses:
- Pay equity.
- Share of corporate income tax (CT is a deductible expense for accounting purposes, but not tax).
- Fines (criminal, administrative).
- Surcharges.
- Game losses.
- Donations (expenses that are not necessarily essential for the company).
Criterion for Temporal Allocation of Revenue & Expenses: Accrual basis of inventory valuation (FIFO, LIFO, etc.) is accepted.
Tax Loss Carryforwards Compensation
Negative tax bases that have been subject to liquidation or reversal may be offset against positive income for the 15 years immediately following.
Tax Period
The tax period ends in any of the following cases:
- An entity becomes extinct.
- A Spanish company changes its residence to a foreign territory.
- An entity undergoes a legal transformation and the merged entity is not subject to this tax.
Chargeable Tax
Tax is payable on the last day of the fiscal year.
Tax Rate
The standard corporate income tax rate is 25% (previously 30%).
Comprehensive Fee
The comprehensive fee is the amount resulting from applying the tax rate to the tax base.
Double Taxation Relief
: Spanish Society (residence) established in Spain and receives income from abroad. You will pay tax on all income earned regardless of where it was obtained. When the income obtained in another country, will be fully taxable real to contribute.
There are 2 kinds Exemption (BASE) for us to be exempt dividends or shares in benefits for non-residents in Spanish territory and age 1 percentage year.2) Deduction (FEE: 1.-Tax borne by the taxpayer. When the tax base of the taxpayer are integrated and taxable income earned abroad, will be deducted from the whole amount lower of the two amounts 2.-Dividends and profit participations. When the tax base is computed dividends or bonuses paid by a non-resident entity in Spanish territory, minus the tax paid,
BONUS: two purposes: 1.Fomentar or protect certain geographical areas (always within the Spanish territory)
2.Proteger certain activities.
50% bonus share, the share corresponding to integrate income obtained in Ceuta and Melilla in order to implant the industrial
Spanish a.Entidades fiscally domiciled in those territories.
b.Entidades Spanish tax resident outside those territories and operate them through establishment or branch.
foreign c.Entidades not resident in Spain and operating in those territories through a permanent establishment
2 1.La fisheries export promotion.
To enhance or maintain actividades.Cines: have a 99% bonus. Subvdas films are entitled to bonuses.
2.Servicios provided to public companies, 99% bonus.