Company Formation & Tax in Spain
A large EU market with a low-capital company form — the SL, the corporate tax rate and new-company relief, VAT, and the Startup Law incentives.
Spain offers full EU single-market access, a low minimum-capital company form and a growing reputation as a startup hub since its 2022 Startup Law. It is not a low-tax jurisdiction, but for businesses that want a genuine European presence — or residency through business — it is a credible, well-regulated base.
Choosing an entity
The standard vehicle is the SL (Sociedad Limitada / Sociedad de Responsabilidad Limitada), the private limited company used by most SMEs, with a minimum share capital of EUR 3,000 fully paid at incorporation. A single-owner variant, the SLU, is common. Larger and listed businesses use the SA (Sociedad Anónima, minimum EUR 60,000). Non-residents can own and direct an SL but need a Spanish tax number (NIE); incorporation is notarised and registered with the Mercantile Registry, and can be handled remotely by power of attorney.
Corporate tax and VAT
| Company | Corporate tax rate |
|---|---|
| Standard rate | 25% |
| Newly created companies (first two profitable years) | 15% |
| Micro / small enterprises | reduced rates (~19–23%, phasing under Ley 7/2024) |
| VAT (IVA, standard) | 21% |
Corporate income tax (Impuesto sobre Sociedades) has a standard rate of 25%. Newly created companies pay a reduced 15% in their first two profitable years, and micro and small enterprises benefit from reduced rates that are being phased down under Ley 7/2024 (broadly in the 19–23% range depending on size). VAT (IVA) is 21% standard, with reduced rates of 10% and 4%; there is no registration threshold — a company must register before issuing its first invoice. Spain is rolling out mandatory e-invoicing (Verifactu).
Compliance
Companies file quarterly advance corporate-tax payments and an annual corporate tax return, quarterly VAT returns, and annual accounts with the Mercantile Registry. Employer social security contributions are substantial and should be factored into hiring costs. R&D and innovation activities can access generous tax credits.
Frequently asked questions
What is the corporate tax rate in Spain?
25% standard, with a reduced 15% rate for newly created companies in their first two profitable years and lower phased rates for small and micro enterprises.
How much capital do I need for an SL?
EUR 3,000, fully paid at incorporation.
What is the Spanish VAT rate?
21% standard, with reduced rates of 10% and 4%; there is no registration threshold.
Can a non-resident own a Spanish company?
Yes — non-residents can be sole owners and directors, but need a Spanish NIE number.
Official sources
- Agencia Tributaria (Spanish Tax Agency)
- Invest in Spain (ICEX)
- Company law — the Capital Companies Act; Startup Law (Ley 28/2022)
This guide is general information prepared by ARM Management and is current as at June 2026. It is not legal or tax advice; small-company rates are being phased and rules change. Confirm against the Agencia Tributaria, or with an advisor, before acting.
Establish your Spanish company correctly.
ARM Management advises international founders on Spanish entity formation, tax positioning and the Startup Law regime, alongside wider EU structuring. Begin with a confidential conversation.