Income Tax for Individuals and Companies in Spain

Today in our article, we would explain the main characteristics of taxes on the income obtained by individuals and companies.

Kinds of Income Tax

First of all, we have to say that in Spain there are two kinds of taxes on income:

  • Tax on individuals (called IRPF and IRNR) that can affect the income of residents and Non-Resident people.
  • Corporate Tax (called IS) that affects the income of companies.

Individual Income Tax (IRPF)

The income tax for individuals (IRPF) is a personal, subjective, direct, annual and progressive tax that taxes the worldwide income during a calendar year. Specifically, the incomes that are affected by this tax are those that come from work, capital (immovable properties and stock, shares, all types of investments) and other economical activities (business).

You must fill in the Tax Form according to the Law considering all the income received during a calendar year and as a result, you have to pay the tax (in two instalments) or ask for a refund. This tax is the most important of the Spanish tax system given due to the amount collected

Tax on income of Non-Residents (IRNR)

The income tax for individuals or companies that are non-resident in Spain (IRNR) is a personal, subjective, direct, annual and progressive tax that only taxes the income obtained in Spain instead of their worldwide income. Incomes that are affected by this tax as we explained in our article about if you have to pay Non-Resident IRPF are:

  • Activities carried out in Spanish territory, including business, whether or not there is a physical location.
  • Salaries and other incomes that come from personal activity carried out in Spain.
  • Income from real estate in Spain.
  • Capital gains come from securities, shares, or financial products that come from individuals or companies that are Spanish residents.
  • Pensions and benefits received from the state of being non-resident.
  • Director fees from the board of directors of Spanish companies.
  • Dividends and income from shares of Spanish companies.
  • Fees such as rights in patents, plans, artistic works, computer programs, etc are satisfied by residents in Spain.


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Corporate Tax

The last tax that we comment on in this article is the Corporate Tax (IS) which affects the income of companies that are resident in Spain. It is a personal, direct, objective and periodic tax.

To determine its taxable base and the amount that finally has to be paid, it is necessary to start from the Profit and Loss Account that has to be modified by some positive or negative adjustments and then offset the previous year’s losses against the taxable profit The forms that are related to IS are:

  • Form 200 “Corporate Tax” that applies to companies and other entities and all IRNR taxpayers with a permanent establishment in Spain.
  • Form 202 “Corporate tax, split payment general regime”.
  • Form 220 “Corporate tax, fiscal consolidate regime” applicable to taxable groups.

We recommend you read this article if you wish to know more about Corporate Tax in Spain, in this article we explain to you how to submit it and how to calculate the taxable base and the income tax. If you need an adviser’s office to submit these taxes or you have any doubts about them, we encourage you to contact with GMTax. We are an expert in issues related to Tax Agency and we use our knowledge to attend to each case in detail. Contact our tax advisors in Barcelona regarding this topic.

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