New companies in Spain – tax reduction

New changes have been approved for the government to stimulate growth and creation of employment in Spain, set forth in the Royal Decree – Law 4/2013, of 22nd February, of which article 7 sets out the following:

Article 7. Incentives for newly incorporated companies in Spain.

For the purposes of the tax periods starting on 1st January 2013, the following modifications, amongst others, must be taken into account:

1. The newly incorporated companies set up from 1st January 2013, which carry out economic activities, shall pay taxes in the first period in which the taxable amount is positive and in the following period, according to the scales below:

• For a income base between 0 and 300,000 Euros, at the rate of 15%.
• For the remaining tax base, at the rate of 20%.

2. For the purposes of the provisions in this regulation, an economic activity shall not be considered as commenced:

• If the economic activity had been carried out previously by another person or company linked and conveyed by any legal title to the newly incorporated company in Spain
• If the economic activity had been carried out, during the year prior to the incorporation of the company, by a natural person with a direct or indirect share in the capital or in the funds of the newly incorporated entity of more than 50%.
• Those companies that form part of a group shall not be considered as a newly incorporated company.

We inform you that in general terms and for companies in Spain with a turnover of more than 10 million Euros the following tax rates must be taken into account:

• 30% for the first 300,000 Euros profit.
• 35% for any further profits.

The Small and Medium Entities (so called PYMES) that in general have a turnover of less than 10 million Euros and have less than 25 employees must take into account the following rates:

• 25% for the first 300,000 Euros profits
• 30% for any further profit

If you are thinking about setting up a new company in Spain, ATA will inform you from the first moment about each of the tax and corporate obligations to be taken into account.

Do not hesitate to contact us for further information.