Understanding Taxes for Businesses and Individuals in Spain
Taxes on Insurance Premiums
This is an indirect tax levied on insurance premiums. The taxable event is the realization of insurance operations and capitalization. The taxable event occurs when the premiums are paid for the operations. The tax base is the total amount of the insurance premiums. Taxpayers are insurers that impact those who hire insurance or are subject to this tax.
Regional and Local Taxes
Autonomic Tax / City Tax
These are the taxes that municipalities may require.
Property Tax (IBI)
This is a direct tax of a real character that is charged on the value of property owned by the taxpayer. It is an annual tax. Its tax period coincides with the calendar year. The taxable event consists of the real property, whether rural or urban, that falls within a municipality and by the possession of rights or administrative concessions on such properties. The taxable amount is the value of such assets, taking these effects the rateable value thereof, which is the value at which these properties appear on the Cadastre. Being a tax of a real character, the personal circumstances of the taxpayer are not taken into account. The tax liability is obtained by applying the tax base to the tax rate set by each municipality.
Activities Tax (IAE)
This is a direct tax levied on the exercise, by legal entities, of an economic activity. It is an annual tax, the tax period coinciding with the calendar year. The taxable event is the exercise of any economic activity, namely business, professional, or artistic. The tax liability is obtained through the application of specific tariffs depending on the sections and headings that are classified in different activities.
Tax on Motor Vehicles
This is a direct tax that is levied on motor vehicles that are likely to travel on public roads, regardless of their class and category. Its frequency is annual, your tax period coinciding with the calendar year. The tax is set by the application of tariffs by type of vehicle and its engine power, established for tax purposes.
Tax on Increase in Value of Urban Land
This is a direct tax levied on the increased value of urban land, whenever it appears to result from the transfer of ownership. The tax base is the actual increase in value that has been revealed. The tax is obtained by applying to the base the tax rate set by each municipality within established limits.
Tax on Construction, Installations, and Works
This is an indirect tax. The taxable event is the real increase in the value that has been made. The tax liability is obtained by applying to the base the tax rate set by each municipality within established limits. The tax rate may be set by each municipality within established limits.
Other Municipal Taxes
Among the most common charges that could affect the activity of the enterprises are the license fee for opening establishments and the service fee for refuse collection, among others.
Steps for Individual Companies to Register Activity
Initial Filing
Notice of Commencement of Activity
This procedure is done by submitting a form to the Finance Department. A census declaration is used to communicate the beginning of a business. Deadline: The form must be submitted before the start of the activity. Held in the Finance and Administration Agency Delegation of the State Tax Administration for the company’s tax domicile.
The Census Declaration
This is a process that should be made by people who develop or will develop business and professional activities, and also those persons meeting income by those who are required to withhold tax. It is made by filing in the offices of the relevant tax authority of the declaration census, which is a printed official form, which collects personal data and the activity taking place or to be performed. It is due to inform the tax authority of the beginning, modifications, and cessation of activities. A survey of entrepreneurs, professionals, and retainers is formed in each delegation of Finance and is updated continuously. The census declaration form also serves other functions such as, for example, that through this form legal persons can apply for a Tax Identification Number (TIN). It also serves to inform the tax office of data on all economic activities taking place, the effects of the Economic Activity Tax (IAE).
- Income Tax
- Individual Income Tax
- Value Added Tax (VAT)