Corporate Tax and Tax Compliance in Spain

The standard Corporate Income Tax rate in Spain is 25% on the tax base, under Law 27/2014. Newly created entities benefit from a reduced rate of 15% during the first fiscal year with a positive tax base and the following year. This rate applies equally to subsidiaries and branches of foreign companies that are tax resident in Spain. Available deductions (international double taxation, R&D, capitalisation reserve) can significantly reduce the effective rate.

Besides CIT (25%), a subsidiary must comply with VAT (21%/10%/4%), payroll withholdings (IRPF), withholdings on property rent (19%), withholdings on dividends and interest paid to the parent (19%, reducible by DTT or Parent-Subsidiary Directive), Social Security contributions (approximately 30% on gross salary), Business Activity Tax (IAE — exempt if turnover below EUR 1 million), and Property Tax (IBI) if the subsidiary owns real estate. The total effective tax burden depends on the structure of operations and applicable treaties.

The annual CIT return (Form 200) must be filed within 25 calendar days following the 6 months after the end of the fiscal year. For most subsidiaries with a fiscal year coinciding with the calendar year, the deadline is 25 July. Instalment payments (Form 202) are due in the first 20 days of April, October and December. Late filing generates automatic surcharges of 1% per month up to the 12th month, 15% thereafter, plus late-payment interest.

SII (Suministro Inmediato de Informacion) is an AEAT system requiring electronic submission of invoicing records within 4 calendar days. It is mandatory for companies with turnover exceeding EUR 6,010,121.04, REDEME registrants, and VAT groups. Many multinational subsidiaries are required to use SII due to exceeding this threshold. Companies under SII file Form 303 monthly (not quarterly) and are exempt from filing Forms 347 and 390.

VeriFactu is the verifiable electronic invoicing system established by RD 1007/2023. It requires invoicing systems to generate records with a digital fingerprint (chained hash) guaranteeing data integrity. Following a deadline extension by the AEAT, it will become mandatory from 1 January 2027 for Corporate Income Tax taxpayers, and from 1 July 2027 for self-employed and other professionals. Subsidiaries must adapt their systems during 2026. Euroaccounts advises clients on the technical adaptation to ensure compliance before the effective date.

Under Article 18 of Law 27/2014 and RD 634/2015, subsidiaries carrying out related-party transactions must maintain documentation including: Master File (information on the multinational group), Local File (information on the Spanish entity and its related-party transactions), and Country-by-Country Report if the group’s consolidated turnover exceeds EUR 750 million. The documentation must be available to the AEAT upon request. The penalty for inadequate documentation is EUR 1,000 per omitted data item, with a minimum of EUR 10,000.

Dividends paid by a Spanish subsidiary to a non-resident parent are subject to 19% withholding as a general rule. This may be reduced under the applicable Double Tax Treaty. Additionally, the Parent-Subsidiary Directive (2011/96/EU) exempts withholding when the parent is an EU entity holding at least 5% of the subsidiary’s capital for a minimum period of 1 year. Application of these exemptions requires supporting documentation and filing of quarterly Form 216 and annual Form 296.

The cost of a comprehensive tax compliance service for a foreign subsidiary in Spain depends on transaction volume, number of employees and complexity of related-party transactions. For a standard subsidiary of 10-25 employees with intra-Community operations, Euroaccounts offers a recurring service covering CIT, VAT, withholdings, transfer pricing and the complete tax calendar. Request a personalised proposal. Over 500 international companies have trusted our Madrid team since 1996.