Tax Regime

The Spanish system comprises three types of tax: impuestos (taxes), tasas (fees) and contribuciones especiales (special contributions). The tasas and contribuciones especiales are quantitatively much lower than the impuestos and are enforced as compensation for the provision of services or utilities as a result of public works and services. In addition, the Spanish authorities have undertaken an ambitious taxation reform project which came into force in 2007 and has involved a considerable modification of certain taxes which are mentioned below.

Among other aspects, the reform has led to a reduction in the Corporation Tax rate to 30% (to 32.5% in 2007 and to 30% in 2008) for large companies and to 25% for SMEs, a simplification of the calculation of Income Tax and a modification of the rates applicable to taxpayers not residing in Spain who are subject to a double taxation agreement (notably with a substantial reduction in the taxation of capital gain from 35% to 18%).

Direct taxes

Income tax

• Corporation Tax (IS).
• Personal Income Tax (IRPF).
• Income Tax for Non-residents (IRNR).

On property (affecting only private individuals)

• Wealth Tax (IP).
• Tax on Inheritance and Donations (ISD).

Indirect taxes

• Value Added Tax (IVA).
• Asset Transfer and Legal Acts Tax (ITP and AJD).
• Special Taxes.
• Customs duties on imports.
• Tax on Insurance Premiums.

Local taxes

There are two different types of municipal tax which can be classified as follows:

Periodic taxes

• Property Tax.
• Business Activity Tax.
• Road Tax.

Other taxes

• Tax on Constructions, Installations and Building Work.
• Tax on the Increase in Value of Urban Land.

For more information please do not hesitate to contact us.