The IAE (Tax on Economic Activities) is a tax that taxes the economic activity of companies in Spain. Only those companies whose net turnover exceeds one million euros are required to pay this tax. The amount of the IAE is determined based on the company’s turnover and other factors.
Meaning of IAE
The IAE is a municipal tax administratively managed by the Tax Agency (AEAT). It covers taxpayers such as natural persons (self-employed), legal persons (companies) and entities without legal personality (inheritances, communities of property) that carry out business, professional or artistic activities. However, agricultural, livestock, forestry and fishing activities are not subject to this tax.
How much do you pay for the IAE?
The calculation of the IAE can be complex and is based on several coefficients: 
A coefficient depends on net turnover. Net turnover must be reported using Form 848 (annually, from January 1 to February 14) or through Corporate Tax. The location coefficient depends on the municipality where the society is located.
There are three tax types:
- The minimum municipal rate is specified in the applicable official rate tables and entitles the taxpayer to operate within a municipality.
- The provincial rate gives the taxpayer the right to operate throughout the province
- The national rate gives the taxpayer the right to operate throughout Spain
The rates are fixed, but the tax calculation can be adjusted according to objective aspects of the activity, such as electricity consumption or the size of the commercial premises.
Activities exempt from the IAE
In general, commercial, professional and artistic activities are subject to the IAE, except those related to agriculture, livestock, forestry and fishing. The classification of activities is found in the tax office tables.
Who is excluded from this tax?
The exemption applies to:
- Natural persons: that is, all self-employed persons;
- Legal entities with a net turnover (Net Turnover Amount) of less than 1,000,000.00 Euros and civil companies.
In any case, all taxpayers are also exempt during the first two years of activity. In order to claim these exemptions, certain information and formal obligations must be met. It is essential to register the economic activity through Forms 036 or 037 before starting operations, indicating the corresponding IAE number.
IAE tax models
Form 840: It must be submitted by those who are subject to the IAE and do not comply with the exemptions. It is also used to report changes in the situation that affect the calculation of the IAE or to cancel the activity. If the turnover exceeds €1,000,000 and the situation changes, the form must be submitted before the end of the next tax period. Form 036: Used to request the tax identification number (NIF) for legal entities. Includes fields to mark the NIF request and other tax communications. It can be done online, except if the applicant is not yet in the database. Form 037: Applicable to self-employed persons for registration at the tax office. It is carried out in two stages: before starting the activity to record anticipated costs and when the first invoices are issued to declare the definitive start of the activity. At GMTax Consultancy we specialize in this type of procedures and all others related to the operations of your company or tax accounting issues. Please feel free to contact us now for professional help in these matters.
