Spain taxes residents on worldwide income and non-residents on Spain-source income only. Spain operates an administrative assessment system: taxpayers file a return, but the tax administration (Agencia Tributaria) computes and confirms the final liability, with most employees having wage withholding settle the bulk of their liability during the year ahead of the annual reconciliation.
The Spanish tax year is the calendar year. The individual filing period typically runs from early April to the end of June of the following year (exact dates confirmed annually by the Agencia Tributaria), with no general filing extension beyond that window.
Spain's headline corporate income tax (CIT) rate is 25%.
The headline personal income tax (PIT) rate is residents up to 47% (regional variation to 54%); non-residents 24% (19% EU/EEA).
The standard VAT/GST (or equivalent consumption tax) rate is 21%.
An individual is a Spanish tax resident if they spend more than 183 days in Spain during a calendar year (occasional absences count toward the total unless residency elsewhere is proven, with extra scrutiny for stays claimed in listed tax havens), or if Spain is their main base or center of economic activities or interests. Residents are taxed on worldwide income; non-residents only on Spain-source income.
A non-Spanish entity has a Spanish permanent establishment through a fixed place of business or a dependent agent habitually concluding contracts in Spain on the entity's behalf, following the OECD Model Treaty definition as applied under Spanish domestic law and any applicable tax treaty.
Spain's CFC regime (Article 100 LIS for corporate taxpayers, Article 91 LIRPF for individuals) applies where a Spanish resident holds, directly or indirectly - alone or with connected persons (spouse, ascendants, descendants, siblings and their spouses) - more than 50% of the capital, equity, voting rights, or income rights of a foreign entity, and that entity's effective tax burden is below 75% of what the same income would bear in Spain (i.e., below roughly 18.75% given the general 25% corporate rate). Where the foreign entity lacks material human and physical resources, its entire income is attributed to the Spanish resident; where it has substance, only specific passive income categories (dividends, interest, royalties, real estate income, capital gains, and certain related-party transactions) are attributed - taxable whether or not distributed.
Spain repealed its formal debt-to-equity thin capitalization rule; interest deductibility is instead governed by a general limitation under Article 16 LIS (implementing ATAD): net financial expense is capped at 30% of tax-EBITDA, with an automatic EUR 1 million minimum deduction regardless of EBITDA. Effective January 1, 2024 (Law 13/2023), the EBITDA calculation explicitly excludes income, expenses, or amounts not included in the taxable base. Excess capacity may be carried forward five years; disallowed interest carries forward with no time limit. A separate, stricter rule denies deduction entirely for intra-group debt used to acquire participations or make contributions to other group entities, absent valid economic reasons.
Spain does not use an elective check-the-box classification system; entity classification generally follows the entity's actual legal characteristics. Spain has implemented ATAD2-aligned anti-hybrid rules denying deductions for payments producing a hybrid mismatch outcome.
A Spanish resident (individual or entity) must file the annual Modelo 720 informational return once foreign assets exceed EUR 50,000 in any of three separate categories - bank accounts, securities/rights/insurance, or real estate - assessed independently, so a resident could be required to report in one category without meeting the threshold in another. Once a category has been reported, a further filing is required only if the value in that category increases by more than EUR 20,000, or upon disposal of the relevant assets. Non-compliance historically carried severe fixed penalties that the Court of Justice of the European Union found disproportionate in 2022, leading Spain to revise the penalty regime, though the underlying filing obligation remains in force. This is Spain's own domestic foreign-asset reporting regime, distinct from Spain's separate participation in CRS automatic exchange described under Treaty Network below.
Spain provides a participation exemption for qualifying dividends and capital gains: a Spanish company holding at least 5% of a subsidiary's capital (or with an acquisition cost of at least EUR 20 million) for a continuous minimum 12-month period is generally exempt from Spanish corporate tax on dividends and capital gains from that shareholding, subject to a subject-to-tax condition requiring the subsidiary to be subject to a foreign tax comparable to Spanish corporate tax.
Spain has a real foreign tax credit regime available to both individuals and companies for foreign tax paid on foreign-source income also taxed in Spain, capped at the Spanish tax otherwise due on that income, available under an applicable treaty or unilateral relief provisions.
Spain has more than 90 double tax treaties in force, most following the OECD Model Convention. The BEPS Multilateral Instrument (MLI) took effect for 49 of Spain's covered treaties on January 1, 2023, and for 5 further treaties on January 1, 2024. To claim treaty-reduced withholding, non-resident recipients must provide a valid tax residency certificate specifically referencing the applicable treaty - Spain's tax authority (AEAT) has been rejecting generic residency certificates on audit.