Doing business in Spain? Here’s your corporate tax guide

Spain corporate tax: Rates, incentives, and key changes for foreign companies, SMEs, and startups

Spain corporate tax has positioned the country as one of Europe’s top spots for business growth and international investment.

With its prime location, modern infrastructure, and attractive tax incentives, it’s no surprise that more companies are eyeing Spain for expansion.

Recent corporate tax reforms have brought major changes to Spain’s corporate tax system, opening new doors for foreign companies, startups, and SMEs.

From updated rules on SME taxation in Spain to new advantages under the Spanish startup law and ETVE holding structures, the landscape is shifting in favour of innovation and growth.

Whether you’re a small business looking into tax for SMEs in Spain, a new venture exploring the startup tax in Spain, or an established brand planning Spain business expansion, the current system of corporate tax incentives in Spain makes the country a stronger choice than ever.

Key highlights of Spain corporate tax reforms include:

• Progressive SME taxation in Spain: reduced rates phased down (for qualifying SMEs) compared with the standard 25% rate
• Enhanced capitalisation reserve: higher potential tax base reductions linked to equity and workforce growth
• New micro-enterprise rates: lower rate bands on the first €50,000 of taxable income (for qualifying micro-entities)
• Stronger ETVE holding Spain benefits: participation exemption regime for qualifying dividends/capital gains
• Comunidad Valenciana wealth tax threshold increased to €1 million (regional measure)

To make the most of Spain’s corporate tax changes, it’s important to understand the wider tax system, and getting help from professional tax and accounting experts is key to a smooth business expansion.

Spain corporate tax at a glance (rates and who they apply to)

Spain corporate tax

Spain’s tax system has gone through significant changes in recent years.

These reforms aim to make the country more attractive for foreign companies in Spain.

Below, we’ll break down the key points in plain language so you can understand how Spain corporate tax system works.

The standard corporate tax rate in Spain

The base rate of corporate tax in Spain is 25%. This applies to most resident companies and puts Spain in line with many other EU countries.

But there are now more tailored rules and incentives for different types of businesses.

Resident vs non-resident companies

Resident companies

• Pay corporate income tax (Impuesto sobre Sociedades) on worldwide income.

Non-resident companies

• Only taxed on income earned in Spain.
• Can be taxed through:
  
  • Permanent establishment (like a branch)
  • Non-resident income tax if they don’t have a permanent setup

Key changes affecting Spain corporate tax

Minimum tax for multinationals (EU Pillar Two)

• Spain applies a Top-Up Tax in line with EU regulations.
• Ensures a minimum 15% tax rate for global groups with revenue above €750 million.
• Affects large corporations, not small businesses, but shows Spain is aligned with international tax rules.

New sector-specific taxes

Spain has introduced some special taxes in recent reforms:

• Banks and financial institutions: specific levies on certain income streams (treatment and deductibility rules depend on the measure in force).
• Electronic cigarettes: excise-style tax on e-liquids to regulate an emerging industry.

Foreign company Spain: Branch vs subsidiary

If you’re planning a Spanish business expansion, you need to decide between setting up a branch (permanent establishment) or a subsidiary.

Branch (Permanent Establishment)

• Pays the same corporate tax rate as Spanish companies.
• Some deductions may be restricted.
• More limited access to certain treaty benefits depending on the structure and facts.

Subsidiary

• Full access to Spanish tax incentives, including corporate tax incentives in Spain and Spanish startup law benefits (where applicable).
• Covered by Spain’s treaties with other countries (helps avoid double taxation).
• Must follow Spanish corporate law and reporting requirements.
• More flexibility for SME taxation in Spain and long-term planning.

Spain corporate tax: SME and startup incentives

What’s new for SMEs and startups

• Lower SME rates (turnover < €10M) phased down over time compared with the standard 25% rate (official overview).
• Micro-enterprises (turnover < €1M) get tiered bands with a lower rate on the first €50k taxable base (AEAT tax rate table).
• Enhanced capitalisation reserve: higher base reductions linked to equity growth, with additional benefits tied to workforce growth (PwC summary).

SME tax rate timeline (visual table)

Source references for SME/micro rates: AEAT and PwC.

Micro-enterprise rates (tiered bands)

• Lower rate on the first €50,000, slightly higher on the excess.
• Useful for smaller operating companies planning early-stage growth and cash-flow efficiency.

Capitalisation reserve (enhanced rules)

Reference: PwC – tax credits and incentives, and AEAT INFORMA notes.

Foreign company expansion: Tax optimisation with ETVE

The ETVE (Entidad de Tenencia de Valores Extranjeros) regime is one of Spain’s strongest tax tools for foreign companies looking to expand.

It is especially useful for cross-border MandA and international investment.

Key benefits

• Participation exemption on dividends and capital gains from qualifying shareholdings (conditions apply).
• Often used to improve tax efficiency for qualifying international holding structures.
• Simple requirements: for many cases, a minimum 5% shareholding for 1 year (legal conditions apply).

Strategic advantages

• Access to Spain’s treaty network: extensive double taxation treaty coverage
• Potentially reduced withholding taxes on dividends, interest, and royalties (depends on treaty and structure)
• Alignment with EU directives for certain intra-EU transactions

Operational advantages

• Low minimum capital requirements (depending on the vehicle and structure)
• Straightforward compliance and reporting (with proper accounting support)
• Full alignment with Spanish corporate law

Beckham Law: Benefits for expats

The Beckham Law offers tax advantages for foreigners moving to Spain, especially professionals and international talent.

Tax benefits

• Flat 24% tax rate on Spanish income (for up to 6 years, subject to limits)
• No tax on foreign income earned outside Spain (subject to regime rules)
• Avoids Spain’s high progressive rates (which can reach 47% depending on region and income)

Who can qualify?

• Must not have been a Spanish tax resident in the last 5 years
• Must become a resident through an employment contract or a director role (requirements apply)

Most income must come from employment, not investments.

Regional tax advantages in the Comunidad Valenciana

The Comunidad Valenciana is becoming a hotspot for international business. Its tax policies and location make it a strong choice for expansion.

One major regional update is the increase in the wealth tax exemption threshold.

It rises from €500,000 to €1,000,000, and is applied based on accrual rules for the relevant tax year (regional rules and filing timelines apply).

Beyond taxes, the region offers clear geographic advantages.

Valencia and Alicante host world-class ports, making trade fast and efficient.

From here, companies can serve both European and North African markets with ease.

Valencia also invests heavily in its business ecosystem. It has strong digital infrastructure, tech parks, research centres, and universities that collaborate with industry.

The administration supports foreign investors with simpler procedures and sector-specific incentives in technology, renewable energy, and manufacturing.

Partner with Daleguía y Luzón

Expanding into Spain brings exciting opportunities, but also complex tax challenges.

From structuring your entry to managing compliance and optimising for long-term savings, having the right guidance makes all the difference.

At Daleguía y Luzón, we specialise in helping foreign companies, startups, and investors navigate Spain corporate tax with clarity and confidence.

Our services cover every stage of your journey:

• Strategic tax planning tailored to your business goals
• Full compliance management for filings and reporting
• Cross-border coordination to align with global tax strategies
• Ongoing advisory support as regulations evolve

Ready to explore your opportunities under Spain corporate tax and beyond?