Understanding Corporation Tax in Spain: Key Regulations & Taxable Income

Corporation Tax in Spain

Corporation Tax

It is regulated by:

• Royal Decree 4/2004 of March 5, approving the Revised Text of the Corporations Tax Act (amended in 2006 and 2007 in commercial law).
• Royal Decree 1777/2004 of July 30, approving the Regulation of Tax.

1. Taxable Event and Accrual

The taxable event is the obtaining of income by a legal person with residency in Spanish territory. The revenues that are included are:

1. Economic activities.
2. Farm yields.
3. Income from the assets of the company.
4. The revenues obtained in the transfer of company assets.
5. The revenues from foreign operations, including:
   1. Income from the sale of the company abroad.
   2. Income from shares acquired in foreign companies.
   3. Income earned by permanent establishments or subsidiaries constituted abroad.

What are considered legal persons resident in Spain? Those meeting one of three assumptions:

1. Been constituted under Spanish law.
2. Having established their registered office in Spanish territory.
3. Have effective management in Spanish territory.

The tax period is the fiscal year of the company, and the tax is levied on the last day of the tax period.

2. Taxpayers

Regulated in Article 7 TRLIS. Taxpayers of this tax are all legal persons except civil societies. Also subject to this tax are:

1. Investment funds.
2. Joint Ventures (UTE).
3. Venture capital funds.
4. Pension funds.
5. Mortgage funds.
6. Market regulation funds.
7. Mortgage securitization funds.
8. Asset securitization funds.
9. Guarantee funds for investments.

These are mass properties whose treatment is compared to people even though they lack legal personality.

3. Taxable Amount

To determine the taxable amount, we start from the accounting profit or loss, according to the Profit and Loss Account (P & L) computed by the company in accordance with the rules of the General Accounting Plan (PGC).

On the accounting off-balance sheet, we will make adjustments to positive and negative corrections according to the specific tax rules.

Regarding the temporary allocation, the tax serves the real flow of goods, not monetary or financial.

Among the concepts that come into play at the base, we can highlight: