INTERES Invest in Spain

The Spanish tax system is modern and pro-business. The tax burden in Spain, (i.e. tax and social security contributions as a percentage of GDP), is approximately five points lower than in neighboring countries.

Source: EU Commission Services

The main direct taxes applicable in Spain are:

• Corporate income tax
• Personal income tax
• Non-resident income tax

The main indirect taxes applicable in Spain are:

• Value added tax (VAT)
• Transfer and stamp tax

By the end of 2006, the Spanish tax authorities approved an ambitious tax reform that has entered into force in January 2007 and has amended certain relevant aspects with respect to the above-mentioned taxes.

Among other relevant changes, the reform has involved reducing the corporate income tax rate to 30% (applicable tax rate for periods beginning as of January 1, 2008), simplifying how personal income tax is calculated, and changing the rates applicable to non-resident taxpayers who do not qualify for treaty protection, particularly as regards the tax rate for capital gains which will be cut substantially from the former 35% to 18%.