Spain new tax measures

On 2 December 2016 the Spanish Government approved Royal Decree Law 3/2016 introducing important changes to Spanish Corporate Income Tax Law and other taxes.

A summary of the most relevant measures are the following:

Corporate Income Tax:

  • Prohibition to deduct losses obtained in the sale of participations in subsidiaries.
  • The portfolio decrease in value in subsidiaries which was tax deductible in prior financial years should be included in the Corporate Income Tax base for a minimum amount of 20% in the following 5 years.
  • Companies with a turnover higher than €60 million may only offset NOLs up to a maximum amount of 25% of the positive taxable base. Companies with a turnover between €20 million and €60 million may only offset NOLs up to a maximum of 50% of the positive taxable base. Companies with a turnover below €20 million will continue with the same limitation (60% in 2016 and 70% in 2017 onward).
  • For companies with a turnover higher than €20 million, tax credits to avoid double taxation will have a limit of the 50% of the tax quota of the Corporate Income Tax.

The above measures will enter into force for financial years started as from January 1, 2016 except the measure related to the prohibition to deduct tax losses in the sale of participations in subsidiaries which will enter into force as from January 1, 2017.

VAT:

  • As from July 1, 2017 a new system for keeping VAT registers (electronic system) will be compulsory for companies with a turnover higher than € 6 million.

If it is of your interest, you can access, by clicking this link, to a document prepared by the Spanish Association of Tax Advisors in which I performed a more detailed analysis of these changes.

Please contact:

Joan Pons
Abogado Economista
+34 934 961 800
jpons@etl.es