Company tax & accounting services in Spain
Many of our clients are foreign entrepreneurs from other European countries and the United States who operate Spanish limited companies (Sociedades Limitadas). For them, Company tax & accounting services in Spain are often essential from the start. Compared to countries like the UK or the US, the Spanish system involves significantly more procedures, filings, and ongoing reporting obligations.
But bureaucracy is not the only challenge.
Many founders also struggle with communication with their accountants. Spanish accountants work in a system that requires constant reporting, tight deadlines, and multiple filings throughout the year. As a result, many professionals are permanently overloaded with administrative work, which often leaves little time to properly explain what is happening with a company’s taxes and accounting.
Because of this, many international founders tell us the same thing: the Spanish accounting and tax advisory sector still has a lot of room for improvement, especially when it comes to transparency and communication.
Since the beginning, our goal has been to offer a service that is better adapted to the expectations of international entrepreneurs.
We manage company accounting and tax reporting using Holded, a modern cloud accounting system that allows our clients to access their financial information in real time. This gives company directors full visibility of their numbers and makes it much easier to manage the business.
Our goal is simple: reduce the time our clients spend dealing with tax and accounting matters so they can focus on running their businesses.
Company tax obligations in Spain
Many of our expat clients, particularly those from other European countries and the United States, are often surprised by how complex the Spanish system can be compared to the systems in their home countries.
Some of the founders we work with originally started their activity as self-employed professionals (autónomos). This is often the simplest way to start a business in Spain. However, once income grows beyond a certain level, operating as a freelancer can become less tax-efficient, which is why many professionals eventually decide to create a limited company.
Making this transition requires proper advice. If the company does not have a real business structure or operates essentially as a personal vehicle for income, the tax authorities could consider it a “false company”, which can lead to penalties.
The main tax that Spanish limited companies must pay is corporate tax (Impuesto de Sociedades). This tax is generally applied at a flat rate of 25% of the company’s net profits.
Newly created companies may benefit from a reduced corporate tax rate of 15% during their first years of activity, provided certain conditions are met.
Another important tax is VAT (IVA). The standard VAT rate in Spain is 21%.
However, many of our clients operate internationally and provide services to customers outside Spain. In many of these cases, the services are exempt from Spanish VAT. Even when VAT is not charged, these transactions must still be properly declared in Spain through quarterly and annual VAT reports.
If a company provides services to businesses located in other EU countries, it must also register in the ROI (Registro de Operadores Intracomunitarios). This registration allows the company to apply the reverse charge mechanism, which means invoices can be issued without Spanish VAT when both companies are registered for intra-community transactions.
In some cases, instead of a limited company, two professionals may operate through a civil partnership (sociedad civil).
We work with clients who chose this structure when two professionals collaborate closely and carry out essentially the same activity. A civil partnership allows them to formalize their collaboration, share income and expenses, and maintain a simpler administrative structure than a limited company.
This structure is typically chosen when:
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the activity is purely professional and service-based
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there is no need for significant investment or a complex corporate structure
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partners want to manage billing and costs together
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and they prefer a simpler and more cost-efficient structure than a commercial company.
Accounting requirements for companies in Spain
Companies operating in Spain must comply with two main obligations: filing taxes and keeping detailed accounting records of their business activity.
These requirements are mainly established by the Spanish Commercial Code, and accounting must follow the standards set out in the Spanish General Accounting Plan (Plan General de Contabilidad).
Most companies in Spain submit their main tax filings quarterly and annually.
On a quarterly basis, companies usually submit:
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VAT returns
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advance payments of corporate tax
At the end of the year, companies must submit:
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the annual corporate tax return
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the annual VAT summary, which reconciles the quarterly VAT declarations.
If a company has employees, additional monthly obligations arise. Salaries and social security contributions must be reported to the Spanish Social Security administration, and the corresponding contributions must be paid each month.
From an accounting perspective, companies must record their financial activity in accordance with standard accounting principles. This includes tracking items such as:
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income
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expenses
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assets
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liabilities
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and equity movements.
These records allow the company to produce financial statements that show both its financial position and its performance.
Spanish companies must maintain official accounting books such as:
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the general ledger (libro diario)
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the inventory and annual accounts book (libro de inventarios y cuentas anuales).
Most of our clients run service-based businesses, which means they typically do not need to maintain detailed inventory records.
These accounting books must be submitted electronically to the Mercantile Registry, usually within the first four months of the year following the accounting period.
In addition, companies must prepare annual accounts. These financial statements must be approved by the shareholders at the annual general meeting. Once approved, they must be filed with the Mercantile Registry, typically within the following month.
This system ensures transparency and allows certain company information to become publicly available.
How we help companies manage tax and accounting in Spain
Entrepreneurs coming from countries with less administrative complexity often expect fast responses and clear explanations from their advisors.
In Spain, however, many accountants are overwhelmed with work due to the large number of filings and obligations that both companies and freelancers must comply with throughout the year.
This is why we place a strong focus on communication and transparency.
From the beginning of our relationship with each client, we take the time to clearly explain their obligations and how the Spanish system works. Our goal is to make sure clients understand what is happening with their company’s finances rather than simply receiving reports they cannot interpret.
Technology also plays a key role in how we work. By using modern accounting tools and automation where possible, we reduce administrative work and simplify many processes.
This allows us to focus on what matters most: helping our clients manage their businesses more efficiently and maintaining a high level of client satisfaction.
Another important principle for us is clarity in the service relationship. Everything discussed during the initial meetings is clearly reflected in the engagement documentation. This helps avoid misunderstandings about what the service includes and ensures that expectations are aligned from the beginning.
Frequently Asked Questions
Do foreign entrepreneurs need to set up a Spanish company to do business in Spain?
Not necessarily. Many entrepreneurs start as self-employed professionals because it is the simplest and most flexible option. Becoming autónomo is relatively inexpensive and the activity can be started or stopped easily.
However, once income increases significantly or the business structure becomes more complex, many freelancers decide to create a company. Operating through a company can offer tax advantages and a more suitable structure for growing businesses.
What taxes must companies pay in Spain?
The main tax companies pay is corporate tax, which is generally 25% of the company’s net profit.
The corporate tax return is filed annually, but companies usually make advance payments during the year.
Newly created companies may qualify for a reduced corporate tax rate of 15% during their first years, provided they meet certain requirements.
Can a Spanish company invoice clients outside Spain or in other EU countries?
Yes. Companies registered in Spain can invoice clients located in any country.
Invoices issued to businesses located in other EU countries are typically exempt from Spanish VAT, provided both companies are registered for intra-community transactions. To apply this exemption, the Spanish company must register in the ROI (Registro de Operadores Intracomunitarios).
Invoices issued to clients outside the European Union are also generally not subject to Spanish VAT, although there are specific invoicing requirements and reporting obligations that must be followed.
Do foreign-owned companies in Spain need a local accountant or tax advisor?
Technically, it is possible to manage accounting and tax filings without an accountant.
In practice, however, the Spanish tax and accounting system can be difficult to navigate, especially for entrepreneurs who are not familiar with the local regulations.
Expat founders face additional challenges such as language barriers and a lack of familiarity with the system.
At In English Gestoría, one of our main priorities is clear and transparent communication. We help international entrepreneurs understand their company’s obligations and also advise on areas such as company administration, personal taxation, transactions with related companies, cross-border operations, and double taxation treaties.