Corporate Income Tax is a personal and direct tax levied on income obtained by companies and other legal entities residing in Spanish territory. It is a very important tax, since it affects all those who have created a company, generally limited and anonymous.
The changes in the Corporate Income Tax for 2024 in Spain include several novelties and adjustments that seek to improve collection and adapt the tax system to the new economic realities. Below, we list the seven main modifications:
- A reduced tax rate of 23% (previously 25%) is established for small and medium-sized enterprises (SMEs) with a turnover of less than €1 million. This change seeks to alleviate their tax burden and encourage their growth
- Tax incentives for companies investing in R&D&I (Research, Development and Innovation) are extended. This includes additional deductions and the possibility of applying these deductions early. Companies will be able to benefit from a higher deduction on expenses and investments made in research and development activities, as well as in technological innovation. These deductions will be deductible not only at the end of the fiscal year, but also in advance, improving the cash flow and financial planning of companies
- The rules for offsetting tax loss carryforwards from previous years have been adjusted. Companies will be able to offset up to 50% of the positive taxable income of the current year, instead of the 25% previously allowed
- A new limitation is introduced for the deductibility of financial expenses, establishing a maximum of 30% of EBITDA (earnings before interest, taxes, depreciation and amortization) for the year
- Measures to combat tax avoidance are reinforced, including new reporting obligations for operations with tax havens and the implementation of European directives on aggressive taxation. Companies and entities will be required to provide detailed reports on any transactions or economic activities involving jurisdictions considered as tax havens. This includes the identification of beneficial owners, the source of funds and the purposes of the transactions
- A global minimum tax of 15% is introduced for large multinationals, in line with international agreements promoted by the OECD. This change seeks to ensure that large corporations pay a minimum level of tax regardless of where they generate their profits
- The rules for the taxation of dividends and capital gains are modified, especially with regard to significant shareholdings in other companies. The applicable exemptions and reductions are adjusted to avoid double taxation and ensure fairer taxation.
The objective of these changes is to try to modernize the tax system, promote investment and innovation and thus, be able to ensure greater fairness in corporate taxation.
Companies will have to be attentive to these changes and adapt their tax strategies to be able to comply with and respect these new regulations and take advantage of the opportunities they offer.
This will allow a more efficient compliance with tax obligations, as well as an optimization of resources and a better ability to compete in an increasingly globalized and technological economic environment.
