Overview of the Spanish Tax
System
English
Presentations
Workshop
Overview of the Spanish Tax System (I)
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The Spanish tax system comprises three kinds of
taxes:
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Impuestos (true taxes which are levied without direct
compensation. General Funds devoted for general public
expenditures policies.
Tasas (“dues, fees, charges”) which are collected in return
for a public service provides by the authorities as well as for
the utilisation of public goods.
Contribuciones Especiales (Special levies): levied for any
type of benefit as a result of public works or services.
Overview of the Spanish Tax System
(II)
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Also, we have three levels of taxation:
By the central government.
– By the Autonomous Communities.
– By the local governments.
There are two special regimes applicable in the Basque
Country and Navarre. Those specialities permits a certain
level of independence in building their specific tax system.
The main problem is tax coordination between those
territories and the rest of Spanish State.
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Overview of the Spanish Tax System
(III)
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National taxes in Spain can be classified as follows:
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Direct Taxes:
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On income:
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On assets (affecting only individuals):
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Personal Income Tax
Corporate Income Tax
Non-residents Income Tax.
Wealth tax
Inheritance and gift tax
Indirect Taxes:
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Value added tax (VAT)
Transfer tax and stamp duty
Excise taxes
Customs duties on imports
Tax on insurance premiums.
Overview of the Spanish Tax System
(IV)
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Main features about each tax:
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Personal Income tax:
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Is one of the pillars of Spains’s tax system
Radically reformed en 1998.
The following persons are subject to this tax:
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Individuals habitually resident in Spanish territory.
• Individuals of Spanish nacionality who are habitually resident
abroad and fulfil any of the conditions laid down in the Law (e.g.
diplomatic services).
• A taxpayer is considered to be habitually resident in Spanish
territory if he is physically present in Spain for more than 183
days in the calendar year. Also, if he is the main center of the
taxpayer´s business or professional activities.
Overview of the Spanish Tax System
(V)
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Main features about each tax:
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Personal Income tax:
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Taxpayers are taxed on their entire worlwide income.
The Law distinguishes a general componente and a special
component in the tax base.
The general component comprises the positive balance from
adding:
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Salary income.
Income from real estate.
Income from business activities develop for individuals.
The positive balance resulting from offsetting capital gains and
losses over a period of less than one year.
Overview of the Spanish Tax System
(VI)
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Main features about each tax:
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Personal Income tax:
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The special component comprises the positive balance from
adding:
Income on movable capital.
The positive balance of offsetting capital gains and losses
obtanied over a period exceeding one year.
There are certain tax-free allowances in order to consider
particular and economic circunstances in the determination of
tax base.
The PIT is a progressive tax. We use tariffs (21% applied on
the special component) for the determination of the gross tax
payable and we have, also, some tax credits for housing,
economic activities, donations to certain entities and income
obtained in Ceuta y Melilla territories.
Overview of the Spanish Tax System
(VII)
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Main features about each tax:
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Personal Income tax:
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Taxpayers who are required to file a PIT return must,
when filing their returns, calculate the related tax
payable and pay it over in the place and manner and by
the deadlines determined by the Ministry of Finance.
(June 20th).
The possibility of being taxed individually or jointly (as a
family unit) is regulated and is very important, in order to
reduce tax burdens, to compare both situations.
Overview of the Spanish Tax System
(VIII)
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Main features about each tax:
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Corporate Income Tax:
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The key factor in determining the aplication of CIT is
“residence”. A company is deemed to be resident in
Spain for tax purposes if it meets any of the following
conditions:
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It has been created under Spanish Law
• It has been registered in an office located in Spain.
• The effective management headquarters are in Spain.
Overview of the Spanish Tax System
(IX)
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Main features about each tax:
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Corporate Income Tax:
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Resident companies are taxed on their worldwide
income.
Taxable income includes all the profits from:
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business activities
• Income from investment not relating to the regular
business purpose, and
• Income derived from asset transfers.
Overview of the Spanish Tax System
(X)
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Main features about each tax:
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Corporate Income Tax:
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Spain´s current standard CIT tax rate is 30%
Special rates are applicable to certain entities as small
and medium enterprises (25%).
There are, also, a very complex sistem of tax credits and
allowances:
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Investment and professional training tax credits.
• Investment made in tangible fixed assets to protect the
environment.
• R&D and technological innovation expenses,…
Overview of the Spanish Tax System
(XI)
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Main features about each tax:
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Net Worth tax:
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Resident individuals pay net worth tax on their worlwide assets
at December 31st., of each year, valued in accordance with
tax rules.
Non-residents are taxable on property situated, or rights
exercisable, in Spain.
Tax base is composed by the economic value of all types of
properties and economic rigths, reducing these values for
economic charges related with assets and personal debts.
Tax burden is calculated applying a progressive tariff and there
is a personal allowance of 108.000 €.
Nowdays, the net amount obtain by this tax is devoted to
financing Autonomous Communities.
Overview of the Spanish Tax System
(XII)
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Main features about each tax:
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Inheritance and gift tax:
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IGT applies to Spanish resident heirs, beneficiaries and
donees and is charged on all assets received.
Taxpayers are heirs, beneficiaries and donees as results of a
property transfer by death or “inter-vivos” donation.
There are a lot of reductions to avoid an excessive tax burden
in transfers in favor of spouses or children.
The tax burden is calculated by adjusting a tax scale of
progressive rates (depending on the value of the estate or gift)
with a coefficient that takes into acount:
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The previous net woth,
The age of the beneficiary, and
The degree of kinship with tne donor.
Overview of the Spanish Tax System
(XIII)
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Main features about each tax:
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Value added tax (VAT):
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The Spanish VAT legislation implements the EU Directives on the tax,
whose main rules are harmonized in the different Member States.
This tax is of an indirect nature. This feature does not normally imply
any cost to traders or professionals, but only to end-consumers by
translation in the bill.
This figure taxes:
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Supplies of goods and services.
Intra-EU acquisitions of goods, and
Imports of goods.
Within the Spanish territory, VAT is not applicable in the Canary
Islands, Ceuta and Melilla territories.
VAT rates are as follows:
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21% in general.
10% for special sales and imports, and 4% for first neccesity goods.
Overview of the Spanish Tax System
(XIV)
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Main features about each tax:
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Transfer tax and stamp duty:
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Transfer tax is levied on a limited number of transactions:
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Corporate transactions such as incorporation, capital increase,
reduction companies,. (1%)
Transfers of real estate (6%).
Transfers of movable assets and administrative concessions
(4%).
Certain rights on real estate (rent) (1%).
Certain mercantile law public deeds (o,5%).
It´s a complementary tax of the VAT.
Transfer tax is a cost to the acquiror/beneficiary.
Overview of the Spanish Tax System
(XV)
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Main features about each tax:
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Transfer tax and stamp duty:
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Excise taxes:
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In Spain there are several excises taxes in line with the
EU Directives on this matter.
• These specific consumption taxes are levied on the
related products (alcohol and alcoholic beverages, beer,
oil and gas and manufactured tobacco) in the
manufacturing, processing or import phases.