Spain Corporate Tax Rates 2026: 25% Standard, 15% for New Companies and the SME Path

Spain's corporate income tax system in 2026 operates across several rate tiers: a standard rate of 25%, a reduced 15% rate for newly created companies during their first two profitable years, a micro-enterprise regime with rates of 19% and 21%, and an SME path that currently sits at 23% for companies with turnover below EUR 10 million and is scheduled to fall gradually to 20% by 2029. These rates are governed primarily by Law 27/2014 (the Ley del Impuesto sobre Sociedades, or LIS). Understanding which tier applies to your structure – and how to preserve eligibility – is the central practical challenge for international businesses entering Spain.

Category	Rate(s)	Key Condition / Threshold	Legal Basis
Standard rate	25%	General rule for all resident companies	Law 27/2014 (LIS)
Newly created companies	15%	First two profitable fiscal years; genuine new economic activity required	Law 27/2014 (LIS)
Micro-enterprises	19% (first EUR 50,000) / 21% (above)	Turnover threshold as defined under LIS micro-enterprise rules	Law 27/2014 (LIS)
SMEs (current)	23%	Turnover under EUR 10 million	Law 27/2014 (LIS)
SMEs (target by 2029)	20%	Gradual reduction path; intermediate rates apply in transitional years	Law 27/2014 (LIS)
Non-resident withholding – dividends & interest	19% (general); EU interest often exempt	Subject to applicable tax treaty; rate depends on recipient's residence	RDLeg 5/2004
Non-resident withholding – royalties	24% (general); 19% for EU/EEA recipients	Subject to applicable tax treaty	RDLeg 5/2004

The Legal Framework: LIS and the Role of AEAT

Spain's corporate tax system is codified in Law 27/2014 (LIS), which has been amended on several occasions since its original enactment. The tax authority responsible for assessment, audit and collection is the Agencia Estatal de Administración Tributaria (AEAT). For corporate taxpayers, AEAT administers the annual Impuesto sobre Sociedades filing cycle, monitors transfer pricing compliance and coordinates with regional tax authorities in the Basque Country and Navarre, which operate under their own foral regimes.

Foreign investors should note that Spain's participation in the OECD/G20 Pillar Two framework means that large multinational groups may face a global minimum effective tax rate. The domestic implementation rules for Pillar Two are subject to ongoing legislative development and should be monitored closely as they interact with the rates described in this guide.

Companies registered in Spain are required to file with both the Registro Mercantil and AEAT. The Registro Mercantil records govern legal existence, whereas AEAT governs fiscal status. These two tracks operate in parallel and errors in one do not automatically resolve issues in the other.

Qualifying for the 15% New-Company Rate: Step-by-Step

The 15% reduced rate is one of the more commercially significant features of the Spanish regime, but it carries eligibility conditions that are frequently misunderstood by foreign clients structuring their Spanish entry vehicle.

• Step 1 – Establish a genuinely new entity. The reduced rate applies only to newly created companies carrying out a new economic activity. It does not apply if the activity was previously carried on by a related party, if the new entity is part of a corporate group that already carried on the same activity, or if the company is the result of a transformation or restructuring of a pre-existing enterprise. AEAT scrutinises these conditions closely.
• Step 2 – Incorporate and register correctly. The entity must be incorporated under Spanish company law (typically as a Sociedad de Responsabilidad Limitada or Sociedad Anónima), registered in the Registro Mercantil, and registered with AEAT for corporate tax purposes. The sequence and completeness of documentation matters: errors in the deed of incorporation or delayed Registro Mercantil filing can affect the date from which fiscal activity is recognised.
• Step 3 – Identify the first profitable year. The 15% rate applies in the first fiscal year in which the company's tax base is positive, and in the immediately following year. Years in which the taxable base is zero or negative do not count as the "first profitable year" for this purpose; the clock begins only when profitability is achieved.
• Step 4 – Maintain eligibility throughout. If the company later fails the "new economic activity" test – for example, because it absorbs activities from a related entity – the benefit can be challenged retroactively. Anti-avoidance rules under LIS and general GAAR provisions give AEAT substantial tools to recharacterise arrangements.
• Step 5 – File correctly from year one. The reduced rate must be claimed through the standard IS return (Modelo 200). Documentation supporting the new-activity claim should be assembled and retained from the outset, as audits may occur years later.

If your group is assessing whether a Spanish subsidiary can benefit from the 15% rate, early legal advice on structuring is essential. Our team is available to review the specific facts at info@ferrazwhitmore.com or through our contacts page.

The SME Path: Current Rate and the Road to 20% by 2029

Companies with annual turnover below EUR 10 million currently benefit from a 23% rate under LIS. The LIS reform trajectory contemplates a gradual reduction to 20% by 2029, with intermediate rates applying in the transitional years. As of the date this guide was last verified (22 September 2026), the transitional schedule's precise annual steps are subject to the applicable legislative enactment and should be confirmed with reference to the current version of LIS and any Presupuestos Generales measures in force for the relevant fiscal year.

Maintaining SME status requires careful monitoring of the turnover threshold. Groups should be alert to LIS consolidation rules: turnover is assessed at the group level where companies are under common control, which means that a Spanish subsidiary may lose SME eligibility because of its parent group's overall revenue, even if the Spanish entity itself is small. This is a common source of error for foreign investors who assess only the Spanish entity in isolation.

Micro-Enterprise Regime: 19% and 21% Rates

The micro-enterprise tier introduced under LIS provides a 19% rate on the first EUR 50,000 of taxable base and 21% on the amount above that threshold. This regime is designed for the smallest operators and carries its own set of eligibility conditions under LIS. Foreign-owned micro-enterprises that qualify can achieve a meaningfully lower effective rate than the standard 25%, but the regime is not compatible with all deduction and credit structures available to larger companies. Professional advice on the trade-offs between regimes is advisable before opting in.

Non-Resident Withholding Tax: Dividends, Interest and Royalties

According to RDLeg 5/2004 (the Non-Resident Income Tax Law, or IRNR), the following withholding rates are reported as the general domestic rates applicable to payments to non-residents:

• Dividends and interest: 19% as the general rate. Interest paid to EU residents is reported as often exempt under applicable EU directives, though the precise conditions and any anti-abuse limitations should be verified for each specific payment.
• Royalties: 24% as the general rate; 19% for recipients resident in the EU or EEA.

These are domestic rates. The applicable rate in any given case depends on the recipient's country of residence and whether a tax treaty between Spain and that country provides for a reduced or nil rate. Spain has an extensive network of double taxation agreements, and treaty analysis is an essential first step in any outbound payment structuring exercise. Where a treaty applies, the treaty rate generally prevails over the domestic rate, provided the recipient can demonstrate beneficial ownership and meets any limitation-on-benefits or principal-purpose-test conditions in the treaty.

Foreign groups receiving royalty or dividend income from Spanish subsidiaries should review their treaty position carefully, as AEAT has increased scrutiny of treaty shopping arrangements. The Tribunal Supremo has addressed treaty interpretation questions in several notable decisions, and AEAT's audit practice in this area reflects a substance-focused approach consistent with OECD BEPS outputs.

Transfer Pricing and Anti-Avoidance Rules

Spain's transfer pricing framework under LIS requires that transactions between related parties be conducted at arm's length. AEAT has dedicated transfer pricing audit units, and the frequency of transfer pricing adjustments in tax audits has increased in recent years. Foreign-owned Spanish entities – particularly those in intra-group service, financing or IP arrangements – are a common focus.

Documentation requirements under LIS distinguish between the master file, local file and country-by-country report, each with different thresholds and deadlines. Non-compliance with documentation obligations can trigger penalty exposure independently of any substantive adjustment. Robust tax risk management in this area means assembling documentation contemporaneously, not in response to an audit notice.

Spain's general anti-avoidance rules (GAAR) under LIS, together with specific anti-avoidance provisions targeting hybrid instruments, controlled foreign company rules and exit taxation, give AEAT a broad toolkit. Structures that are commercially motivated but formally aggressive are particularly exposed following legislative changes aligned with the EU Anti-Tax Avoidance Directives (ATAD I and ATAD II).

For a detailed review of your group's Spain tax exposure and structuring options, our tax structuring practice in Spain is available to assist. Please reach out to info@ferrazwhitmore.com to discuss your specific situation.

Common Errors Made by Foreign Clients

Based on recurring patterns in cross-border mandates, the following are the most frequent errors made by foreign investors approaching the Spanish corporate tax system:

• Assuming the 15% rate is automatic. Many foreign clients incorporate a Spanish subsidiary without verifying the new-activity condition. If the parent group already carried on the same economic activity through another entity, the reduced rate will not apply and any returns filed claiming it may be challenged by AEAT.
• Conflating the entity's turnover with the group's. SME and micro-enterprise eligibility is assessed by reference to LIS group-level rules, not just the Spanish entity's own revenue. Foreign parent structures are frequently overlooked in this analysis.
• Late or incomplete Registro Mercantil filings. Delays in completing the Registro Mercantil registration can affect the start date for the company's fiscal activities and create discrepancies in AEAT records. This is a procedural risk that is easily avoided with proper local support.
• Failing to document the beneficial ownership for treaty claims. Withholding tax reductions claimed under a treaty require a formal beneficial ownership analysis. Simply holding shares through a holding company in a treaty country is not sufficient if that company lacks substance.
• Overlooking the CNMV dimension for regulated entities. Foreign groups that acquire or establish entities subject to CNMV supervision face additional disclosure and compliance obligations that interact with the corporate tax cycle. Failing to coordinate legal and tax advice for regulated structures is a common source of cost overruns.
• Ignoring the Canary Islands ZEC regime. Foreign investors with operations that could qualify for location in the Canary Islands Special Economic Zone may be leaving a meaningful tax advantage unclaimed. The ZEC regime offers rates significantly below the standard 25% for qualifying activities and entities. For a current analysis, see our 2026 alert on the Canary Islands ZEC.

Decision Checklist for Incoming Foreign Investors

Before finalising a Spanish corporate structure, the following questions should be addressed with qualified legal and tax counsel:

• Does the contemplated Spanish entity constitute a genuinely new economic activity under LIS, or does group history disqualify it from the 15% rate?
• What is the consolidated group turnover for LIS purposes, and which rate tier – standard 25%, SME 23% (trending to 20%), or micro-enterprise 19%/21% – will apply?
• Has a treaty analysis been conducted for all anticipated outbound payments (dividends, interest, royalties) from the Spanish entity?
• Is the group subject to Pillar Two and, if so, how does the Spanish effective rate interact with the global minimum?
• Are transfer pricing documentation obligations met from the first intercompany transaction, not retrospectively?
• Has the Canary Islands ZEC option been considered and, if relevant, assessed against operational requirements?
• Have Registro Mercantil and AEAT registration steps been coordinated to avoid discrepancies in fiscal start dates?

Our corporate law practice in Spain works alongside our tax team to provide integrated advice from incorporation through to ongoing compliance. If you have questions about structuring a Spanish entity or reviewing an existing structure, we welcome a preliminary discussion – please contact us at info@ferrazwhitmore.com or visit our contacts page.

Disclaimer: This publication is provided for informational purposes only and does not constitute legal advice. The information herein should not be relied upon as a substitute for professional legal counsel tailored to your specific circumstances. Ferraz & Whitmore assumes no liability for actions taken or not taken based on the contents of this material. For advice regarding your particular situation, please contact info@ferrazwhitmore.com.