Before talking about the types of taxes that companies must pay, we must differentiate the taxes intended to tax companies into two types: direct and indirect taxes.
Direct taxes are those that tax the possession or generation of wealth, that is, they pay for what they have in cash or have earned.
On the other hand, indirect taxes are those that tax consumption, that is, the use made of that generated wealth.
In addition to these taxes, we find three other classifications related to territorial distribution or organization:
- State taxes: Tax on Economic Activities (IAE), Corporate Tax (IS), Value Added Tax (VAT).
- Regional taxes: these taxes vary by region, and we will see them later.
- Local taxes: taxes, fees, and contributions.
Once we have explained these categories, we can summarize all the taxes that companies must pay:
Tax on Economic Activities (IAE)
This tax, as its name indicates, taxes the economic activity of natural and legal persons. It applies to both freelancers and companies, whether their activity is artistic, economic, or professional.
This tax is paid annually and has an exception for everyone: those self-employed or companies whose net turnover is below one million euros are exempt from paying it. Regardless of whether it is exempt or not, the company or self-employed person must register with the IAE using forms 036 or form 037.
Corporate Tax (IS)
All companies that reside in our country, were created in Spain, or have their headquarters or registered office here, are obliged to pay it. It is a direct tax that taxes the income of all companies (civil limited, public limited or cooperatives) and legal entities based in Spanish territory.
It is a tax like personal income tax but aimed at companies. It is declared annually, although payment is made in installments over three installments during the year.
The tax rates are a general rate of 25%; special rates, including 15% for newly created companies or tax-protected cooperatives, with a tax rate of 20%.
Value Added Tax (VAT)
This tax must be paid by both citizens and companies, which taxes the consumption of goods and services. That is precisely why it is a bit complex, despite being the best known. This tax is applied in the Peninsula and the Balearic Islands, and in the Canary Islands they have a tax that replaces VAT: it is the General Indirect Canary Tax (IGIC).
We can find two types of VAT and different classifications. If we start with its typology, we find:
- Output VAT: tax that companies collect when they sell their products or services.
- Input VAT: tax that companies pay in transactions with their suppliers.
- Regarding the different types of VAT, they are the following:
- General VAT: 21% for any good or service in Spain.
- Reduced VAT: 10%. Destined for food, transportation, sale of new properties, water, agriculture, livestock and some medical products and services.
- Super-reduced VAT: 4%, contemplated for essential products, such as medicines, books, and some foods (bread, flour, milk, etc.).
To declare VAT, it will have to be done through these models:
- Form 303: One of the most important is the quarterly VAT self-assessment model, where the VAT that has been charged to customers and paid to suppliers is reported. Therefore, we could say that it is the difference between VAT on purchases and VAT on sales.
- Form 390: It is the annual summary of Form 303.
Regional and local taxes
At the local level, the taxes that companies must pay apart from the IAE revolve around these four groups:
- Tax on mechanical traction vehicles (company vehicles).
- Tax for constructions and works.
- Real estate taxes (IBI- owned properties).
- Municipal fees (opening licenses, water, electricity, urban waste, etc.).
Special and environmental taxes
In our country there is a category called special taxes and they have to do with the tax destined for the importation, manufacture and/or introduction into the Spanish territory of certain activities (alcohol and alcoholic beverages and hydrocarbons), as well as the registration of certain positions. transport, the supply of electrical energy and the use of coal for consumption.
On the other hand, in Spain there are also environmental taxes:
- Taxes on the production and storage of nuclear fuel and radioactive waste.
- Tax on the value of gas, oil, and condensate extraction.
- Tax on the value of electrical energy production.
- Tax on fluorinated greenhouse gasses.
Personal Income Tax (IRPF)
This tax is related to people (all residents in Spain) and not to companies (yes to the self-employed).
However, companies and the self-employed must withhold 15% on their invoices (7% in the first two years of activity) and declare this withheld personal income tax.
In the case of companies, they must declare their withheld personal income tax with these two models:
- Form 111: for withholdings on payrolls or on professional invoices.
- Form 115: for withholdings in the payment of property rental invoices.
Annual tax models
In Spain we have other Tax Models, in addition to those already mentioned, which are very important for companies: regulation of rents, intra-community operations, and other actions of which the Tax Agency requires notification.
The most important models to consider are:
- Form 180: It is the annual Form 115.
- Form 190: It is the annual Form 111.
- Form 347: It is an annual information model that serves to report the sum of operations carried out with a client or supplier exceeding €3.005,06.
- Form 349: You will need this model if your company carries out intra-community operations, that is, services, deliveries or acquisitions that are made outside of
Spain, but within the European Union.
