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Taxes in Spain

Euro economy

  • Taxpayer Advocacy and Representation before the AEAT
  • Directors' taxation
  • Partnership taxation
  • VAT
  • Capital gains tax
  • Income tax
  • Full tax consulting of the company in all aspects.
  • Fulfillment of all national tax declarations along the year: quarterly VAT declarations, summarised annual VAT form, quarterly Income Tax retention (IRPF) for employees, summarised annual Income tax retention for employees, Corporate Tax, etc.
  • Full consulting and fulfillment of local tax obligations.
  • Officials communications with State Tax Authorities.
  • Fulfillment of the Administratorís annual Income Tax Declaration.
  • Tax Inspections: Representation and defense of the company in any possible tax inspection that may arise from the State Tax Bureau, Regional and/or local authorities.

 

The most important appointment is at the end of the financial year (after the third quarter), planning to ensure the year's result is the desired one. There is no much to do after the financial year is over

There may be different ways we can offer the accounting services:

  • Email us or post us all the receipts (invoices, bank statements, etc).
  • Enter receipts data in a quite simple accounting software, and email us monthly an exported file.
  • We report quarterly by email a profit and loss account, and an interim balanced sheet.

Taxes FAQ's

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How does Spanish taxation works?

There are three levels of tax authority: the State (national); "Comunidad Autonoma" (regional); and Towns (local).
All residents (both individuals and corporate bodies) must pay taxes on all of their worldwide income. Non-residents (N.R) are subject to taxation only on incomes earned or paid on Spanish territory.
The Spanish taxation system classifies tax payments as Taxes, Levies and Contributions.
The main direct taxes applicable in Spain are:

- Corporate income tax
- Personal income tax
- Non-resident income tax

 The main indirect taxes applicable in Spain are:

- Value added tax (VAT)
- Transfer and stamp tax

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How does Spanish Corporate Income Tax works? (Impuesto Sociedades)

Resident legal entities must pay tax taking into account all of their worldwide income. N.R. are subject to taxation for this tax solely for the income accrued or paid on Spanish territory.
In general accounting principles coincide with corporate tax principles, very little non-accounting adjustments must be made.

There are two rates: general 35% and 30% for small size companies.
Calculation: Incomes - Expenses = Profit Before Taxes
Profit Before Taxes x 35% / 30% = Net Profit

There is a system of tax incentives for small-sized enterprises, exclusively applicable to companies whose net turnover in the tax period immediately prior thereto is less than 8 million euros:
- A tax rate of 30%, applicable to the first 120,000 euros of taxable income
- Accelerated depreciation if the asset unit value does not exceed 601.01 euros.
- Deduction in repayment of 10% of the investments or expenses: Access to Internet, Presence on Internet, E-commerce...

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What is a tax resident?

Individuals shall be deemed to have their principal residence in Spain if they meet any of the following conditions: They spend more than 183 days per calendar year in Spain or or when the core of their economic interests lies in Spain.
A body corporate shall be deemed to be a resident of Spain if it meets any of the following conditions: It was incorporated in accordance with Spanish law, it has its registered office in Spain, it has its effective headquarters in Spain. A body corporate shall be deemed to have its effective headquarters in Spain if management and overall control of its activities are based in Spain.

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What does permanent establishment (PE) mean?

When, by any legal means, a non-resident has continuous or habitual work facilities in Spain or a place to do any kind of work where he/she/it performs all or part of his/her/its activity, or when he/she/it acts in Spain through an agent with powers to enter into an agreement in the name
and on behalf of the non-resident individual or body corporate, provided said powers are exercised on a regular basis, it shall be considered that the non-resident is acting in Spain through a PE.

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Is it more convenient to operate through PE?.

Generally Non-residentsí tax contributions in Spain are lower if they use a PE in Spain. Also generally speaking branch and PE are equivalent concepts.

N.R. that obtain income through an PE in Spain shall be taxed for the total amount of income attributable to said PE, regardless of where it was obtained.
The tax base of the PE is calculated in accordance with the provisions on the general system of the Corporate Taxation Act (Ley del Impuesto sobre
Sociedades, LIS). General tax rate 35%

Income not obtained through a permanent establishment (EP): In general, the tax base shall be the gross tax base due, i.e. without deduction of any expenses, and tax rate general applicable is 25%. (aeat.es)

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