Contents

Spain Tax Guide

Personal Income Tax

Personal Income Tax in Spain is a direct tax levied on individuals residing in Spain on their worldwide income, using a progressive tax scale.

Income is taxed on two distinct bases:

  • Taxable savings income: dividends, interest, income from movable capital, and capital gains from the transfer of assets.
    • Current Rates for 2025:
      • Up to €6,000 → 19%
      • €6,000 – €50,000 → 21%
      • €50,000 – €200,000 → 23%
      • €200,000 – €300,000 → 27%
      • Over €300,000 → 28%
  • General taxable income: other income (employment, business activities, etc.).
    • The maximum marginal tax rate varies by autonomous community, ranging from approximately 47% to 54% in 2025.

The tax return is filed between April and June of the following year.

IRNR

Taxes individuals and entities not resident in Spain without a permanent establishment on income earned within Spanish territory.

  • 2025 Rates:
    • EU/EEA residents: 19% (with a deduction for expenses in certain cases).
    • Other countries: 24%.

Double taxation treaties may reduce these rates.

Corporate Income Tax

Corporate income tax is levied on the worldwide income of resident entities and on income earned in Spain by permanent establishments of non-residents.

  • General rate for 2025: 25%.
  • SMEs with revenue <€1M: 23% (starting in 2023).
  • Newly established companies: 15% during the first tax period with a positive tax base and the following period.

There are deductions and incentives (R&D&I, sustainability, hiring, green economy).

The tax return must be filed within 25 days following the 6-month period after the end of the fiscal year (example: calendar years, from July 1 to July 25).

VAT

VAT is governed by Directive 2006/112/EC and is levied on consumption at each stage of the production chain.

  • Standard rate: 21%
  • Reduced rate: 10% (food, housing, hospitality services, etc.)
  • Super-reduced rate: 4% (basic goods: bread, milk, medications, books, etc.)

Changes for 2023–2025:

  • 0% rate or temporary reduced rate for certain basic food items and energy (depending on inflationary conditions and budgetary agreements).
  • Mandatory electronic invoicing for B2B transactions under the Crea y Crece Law, currently being phased in (2025–2026).

ITPAJD

  • TPO: Transactions for consideration not subject to VAT. Rates range from 6% to 11%, depending on the autonomous community.
  • AJD: Notarial and commercial documents, ranging from 0.5% to 1.5%, depending on the autonomous community.
  • OS: Capital reductions, dissolutions, or separations of partners, at 1%.

IIVTNU (Municipal Capital Gains Tax)

Local tax on the increase in land value upon transfers.

Following the 2021 reform and subsequent amendments:

  • The taxable base may be calculated using the objective method (coefficients set by law and the municipal government) or the actual method (actual capital gain).
  • If there is no actual increase in value, no tax is due.

Exit Tax

Applies to individuals and legal entities who move their residence outside of Spain:

  • Individuals must report outstanding income and unrealized gains. Deferral is possible if the destination is the EU/EEA.
  • Legal entities must prepay tax on unrealized capital gains upon transferring their tax residence. For equity interests, the double taxation exemption (95%) may apply.

IAE

A local tax levied on economic activity:

  • General exemption for annual revenue under €1 million.
  • Does not apply to individuals.
  • Rates vary by type of activity, location, and business size.

IBI

Annual local property tax. Tax base = assessed value. Rates vary by municipality.

Tax breaks are available for affordable housing, renewable energy, large families, low-income households, etc.

ICIO

Local tax on construction, installations, and building work.

  • Maximum rate: 4%.
  • Common tax breaks for affordable housing, green infrastructure, or renewable energy.

Withholdings

Applicable to income from employment, investment income, rental income, professional services, and prizes.

  • Professional services: 15% (7% for new clients during the first 3 years).
  • Dividends and interest: aligned with savings tax rates.
  • Rentals: 19% on urban leases.

International Tax Transparency (ITT)

Prevents the shifting of profits to low-tax jurisdictions.

  • Applies when Spanish entities control ≥50% of subsidiaries in tax havens.
  • Passive income is attributed to the parent company unless there is evidence of actual economic activity.
  • Aligned with BEPS guidelines and OECD Pillar 2 (a global minimum tax rate of 15% for large multinationals starting in 2024).

Family Wealth (Wealth Tax and Inheritance Tax)

  • Wealth Tax (IP): in effect, although many autonomous communities apply tax credits (e.g., Madrid 100%). Nonresidents are taxed on assets in Spain.
  • Solidarity Tax on Large Fortunes (ISGF): in effect since 2023, complementary to the Wealth Tax, for net worth >€3 million (progressive rate up to 3.5%).
  • Inheritance and Gift Tax (ISD): a tax devolved to autonomous communities, with significant differences between regions (e.g., tax breaks in Madrid, Andalusia, or Galicia).

ETVE / Holding Company

Holding companies in Spain offer tax advantages:

  • Exemption on dividends received from subsidiaries (95%–100%).
  • Exemption from capital gains on the sale of shares (95%).
  • Possibility of tax consolidation for income tax and VAT.
  • Tax credits for property tax (IP) and stamp duty (ISD) under the family business regime.

ETVE: companies that manage equity interests in nonresident entities. They allow for the repatriation of dividends and capital gains tax-free to Spain, making this regime particularly attractive for international groups.