Reduced corporate tax rate in Spain

Corporate tax is one of the main tax burdens for any company in Spain. But it is not all obligations: our system also offers tools to boost those who start or consolidate their business. These include reduced tax rates, designed especially for SMEs and start-ups. These measures are not just a technical detail: they are part of a tax strategy designed to promote economic growth and strengthen the competitiveness of our business fabric.

What does applying a reduced rate to companies mean?

Applying a reduced rate of corporation tax essentially means that some companies are not taxed at the standard rate, but at a lower percentage established by law. With this measure, the tax system seeks to ease the burden on companies that meet certain requirements, usually related to their size, innovative nature or the fact that they are newly created.

This benefit is not just an accounting adjustment: for a start-up company, it can be decisive in enabling it to grow rather than merely survive. By having more liquidity to reinvest in their business, these companies can consolidate their position in the market and become more competitive from their early years.

For example, a small technology start-up developing artificial intelligence solutions can use the tax savings to expand its development team or strengthen its marketing strategy, rather than seeing those resources lost in taxes from the first financial year.

Companies eligible for tax relief

Not all companies are eligible for this special tax regime: the regulations reserve this benefit for certain business profiles. These include:

• SMEs that comply with the turnover limits established by law.
• Newly created companies, which enjoy a reduced rate during their first years of operation to facilitate their start-up.
• Innovative projects, entrepreneurs and start-ups backed by specific support programmes.

These measures are designed for those who need them most: businesses in their early stages or with limited resources, which require scope to reinvest and consolidate their activity. The aim is to ensure that the tax system is not an obstacle, but rather a boost for those who are building the business fabric of the future.

Legal requirements to benefit from the reduced rate

Access to a reduced rate of corporation tax is not automatic: the regulations set out a series of conditions that companies must meet to ensure the proper use of this benefit. Among the most common are:

• Not exceeding the annual turnover thresholds set by law.
• Having legal personality resident in Spain, i.e. being incorporated and registered in the country.
• In the case of newly created entities, not being part of a commercial group.

Meeting these requirements is not only essential for obtaining approval from the Tax Agency, but also provides legal certainty and avoids unpleasant surprises. In practice, ensuring that everything is in order from the outset will allow you to focus on what really matters: growing your business.

How to calculate the tax

Calculating corporation tax at a reduced rate is not complicated, but it does require attention to detail. The starting point is the tax base, which is obtained by adjusting the company’s accounting result using the tax corrections provided for in current legislation.

Once this tax base has been defined, the reduced rate corresponding to your company’s profile is applied, instead of the general rate. This percentage varies depending on whether it is an SME, a newly created company or a start-up benefiting from a special tax regime.

Cases of start-ups and small businesses

In the case of start-ups and small businesses, the reduced rate is particularly relevant. By setting it at a more competitive level than the general rate, it allows initial profits to be less affected by taxation. This makes it easier to reinvest capital in growth, innovation or hiring staff, thus strengthening the foundations of the project from the outset.

Comparison between the general rate and the reduced rate

The difference between the general rate and the reduced rate of corporation tax in Spain is significant. While the general rate is around 25%, companies that meet the requirements for special regimes can benefit from much lower rates, especially in their early years or depending on their size and turnover.

This tax relief provides immediate breathing space for SMEs and entrepreneurs who are taking their first steps, as it allows them to reinvest more easily and promote their growth. In contrast, large companies—with a few exceptions—continue to be taxed under the general regime and maintain the standard rate.

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Frequently asked questions about the application of the reduced rate

• How long does the reduced rate apply?
  Generally, during the first two financial years in which the company makes a profit. This only applies to newly created companies.
• Are all SMEs entitled to reduce their tax liability?
  No. Only those that meet the conditions set out in the current regulations.
• What happens if a company exceeds the turnover limits?
  At that point, it automatically starts paying tax at the standard rate.
• Are cooperatives or non-profit organisations eligible for this regime?
  It depends on the case, although in many cases they have specific reduced taxation regulations.

Tips for planning this benefit from a tax perspective

To take full advantage of the reduced corporation tax rate, it is essential to adopt a strategic vision that looks beyond the short term. Good planning involves analysing how your company’s turnover will evolve, anticipating possible regulatory changes and taking into account the tax calendar to anticipate when the reduced tax rate will cease to apply.

It is also important to design an investment plan that uses the savings from the first few years to strengthen the business: allocating them to innovation, hiring staff or opening new markets can make a difference to your future competitiveness.

Finally, having advisors who specialise in corporation tax for SMEs can help you identify additional deductions that are compatible with this tax regime. The benefit is not only paying less tax today, but also driving sustainable and solid long-term growth.