Santander Legal Persons Account
What is corporation tax?
Corporation tax is a tax on the profits of companies and other legal entities resident in Spain.
Features of corporation tax
Corporation tax is direct, personal, proportional and periodic, in other words:
It is direct because it is a tax on a company's income, thus it directly depends on the financial resources of the company.
It is personal because the tax refers to a specific person, in this case a legal person.
It is proportional because its tax rate is always the same (25% for the general tax rate, although there are lower rates for certain entities, such as newly created companies, cooperatives, non-profit organisations and investment funds).
It is periodic because it is a tax that must be paid periodically, with the tax period being each company's financial year (a 12-month period which, by default, ends on 31 December of each year).
The tax base on which corporation tax is levied relates, broadly speaking, to the company's accounting profit for the year (income less expenditure), reduced by the tax losses of previous years, if applicable.
Exemptions from corporation tax
Organisations that are part of the public sector are excluded from the payment of this tax. Other organisations, such as non-profit institutions, NGOs, professional associations, business associations, trade unions and political parties, are partially exempt from paying corporation tax, although they are required to declare all their income, unless they meet certain requirements.