The Royal Decree-Law 4/2013 created tax incentives that attempt to stimulate growth and job creation in Spain.
Income Tax Incentives for Newly Created Entities
Newly created entities, created on or after January 1, 2013, that engage in economic activities will be taxed in the first tax period in which the tax base is positive as well as in the next according to the following scale:
- Where the tax base is between 0 and 300,000 Euros, newly created entities will owe tax at a rate of 15%
- For the remainder of these entities, the rate is 20%.
What Is Not Economic Activity
- When related or other entities have previously completed the activity and transmitted by any legal title to the newly created entity
- When a physical person, who has an indirect or direct participation in the capital or the newly created entity’s funds (more than 50%), executes an activity during the year preceding the constitution of the entity.
An entity is not a newly created one if it forms part of a group, regardless of its residency, and must create annual consolidated financial statements.
Incentives in the IRPF
Exemption of unemployment benefits in a lump sum
Since January 1, 2013, lump sum payments for unemployment benefits under IRPF are exempt, providing that certain requirements are met.
A 20% reduction of net income for the initiation of new economic activity
Taxpayers who begin an economic activity on or after January 1, 2013 and determine the net return of this activity by the direct estimation method will be able to reduce the net positive result of this activity by 20% where appropriate by corresponding reductions in the first tax period in which it is positive and in the following tax period.
Taxpayers cannot apply the reduction to net income totalling more than 100.000 Euros annually.
For additional information regarding the creation of companies in Spain,
