Corporate tax rate in Spain (2026 guide for expats & foreign founders)

Many expats moving to Spain assume that setting up a company is always more tax-efficient than being self-employed.

This idea is very common among foreign entrepreneurs, often based on superficial comparisons that focus only on tax rates, without considering the full picture — such as the cost of setting up a company, ongoing compliance, or something many overlook: how complex and costly it can be to close it later on.

In this guide, we’ll explain how corporate tax actually works in Spain and, more importantly, whether it really makes sense to operate as a company or as self-employed.

What is the corporate tax rate in Spain?

The standard corporate tax rate in Spain is 25% of the company’s net profit.Unlike personal income tax, which is progressive, corporate tax is a fixed rate applied to the company’s profit — that is, revenue minus costs and expenses.

Newly created companies may benefit from a reduced 15% tax rate, but this only applies during the first profitable tax period and the following one, and only if specific conditions are met.In practice, many founders overlook this reduced rate when making projections, even though it can have a significant impact on early-stage planning — especially when deciding whether to transition from self-employed to a company structure.

How corporate tax actually works in practice

Corporate tax is calculated based on the company’s profit — not its total revenue.This is where most people get it wrong.This is where many founders, especially those without a business background, tend to make mistakes.

Let’s look at a real example from one of our clients, a company providing tech services to a small number of clients in California:Revenue: €522,798Total expenses: approximately €55,000Profit before tax: €467,447Corporate tax (25%): €41,739Net profit after tax: €425,708

Even though the company generated more than €500K in revenue, taxes are only applied to the profit, not to the total invoiced amount.

For us, it’s essential that clients fully understand these concepts. That’s why we provide quarterly follow-up sessions to review both accounting and taxes.

These sessions allow us to explain what has been paid, but also to give a high-level overview of key financial statements, such as the balance sheet and the profit and loss account. This support is especially valuable for clients without a business background.

Is a company tax-efficient in Spain?

A common mistake among many of our clients — particularly those providing services to international companies — is focusing only on the 25% corporate tax rate.

They often compare this with the 35–40% figures they hear from other expats, without fully understanding how those numbers are calculated.

As a result, many assume that operating through a limited company is automatically more efficient than being self-employed.

In reality, this decision depends on multiple factors. In most cases, a simple initial assessment is enough to determine the most suitable structure. This is something we do regularly with our clients.

In more complex situations, we run simulations for both scenarios to identify the most tax-efficient option.

Company vs self-employed in Spain (tax perspective)

Many freelancers in tech and marketing — which represent a large portion of our clients — question whether they should operate as self-employed or through a company.

This doubt often arises from looking at personal income tax rates in isolation, which range from 19% to 47%, without considering available deductions.

For example, there are specific deductions available during the first years of activity, as well as allowances for certain types of expenses. When properly applied, these can significantly reduce the effective tax rate.

It is true that at higher income levels — in many cases, typically above €70,000 in net profit — operating through a company may start to become more tax-efficient.

However, not all professionals can or should operate as a company. There are structural and operational requirements that need to be considered to avoid potential compliance issues.

Additionally, companies come with higher setup and ongoing costs, and closing a company is also more complex. In contrast, being self-employed is more flexible and allows you to adapt your activity more easily over time.

This is why the decision should always be based on a proper analysis, not just on tax rates.

Corporate tax for expats and foreign-owned companies

Most of our clients operating through Spanish companies work with international clients, often in Europe or the United States.

In many of these cases, invoices are issued without VAT. For clients within the EU, companies must register in the ROI (intra-community operators register) and submit periodic VAT declarations, even if the transactions are not subject to VAT under the reverse charge mechanism.

For clients outside the EU, such as the US or Australia, different reporting obligations apply, but VAT returns are still generally required.

We also work with many international e-commerce businesses storing products in Spain. A common misconception is that having a company registered abroad means there are no tax obligations in Spain.

In reality, storing goods in Spain often requires VAT registration locally.Additionally, VAT treatment depends on where customers are located. Sales to Spanish customers are subject to Spanish VAT, while sales to other EU countries may require registration in the OSS system.

This is where many businesses make mistakes. VAT obligations depend on multiple factors, including where goods are stored, where customers are located, and how the business is structured internationally.

Common mistakes foreign founders make

Setting up a company too earlyMany freelancers come to us with the idea of creating a company simply because their income exceeds a certain threshold.

However, this decision is often made without running proper simulations. Personal income tax includes deductions that can significantly reduce the effective tax rate, but these are often overlooked.

In many cases, a short consultation is enough to determine whether a company is actually the right choice — and in some situations, operating as a company may not be appropriate from a compliance perspective.

Confusing personal tax with corporate taxAnother common mistake is comparing tax rates in isolation.

Many assume that a flat 25% corporate tax rate is always better than progressive personal income tax rates. However, without considering deductions, salary structure and business setup, this comparison can be misleading.

Ignoring the international structure of the businessWhere your company is registered, where you live, and where your clients are located all affect your tax obligations.

Many founders overlook how these factors interact, particularly when dealing with VAT, cross-border services or international operations.

How we help foreign entrepreneurs with company taxes in Spain

Most of our clients come to us after trying to figure this out on their own.

In many cases, we recommend starting with a free orientation call to clarify basic questions and understand your situation.

For more complex cases, especially for newly formed companies, we schedule a consultation with one of our tax advisors to assess both your current setup and future plans.

If adjustments are needed, these are included as part of our ongoing service.

Before starting any engagement, we sign a collaboration agreement to ensure full transparency and clearly define responsibilities on both sides.

From that point on, we handle and manage all accounting and tax obligations of the company, working fully in English, remotely, and using modern tools such as Holded.

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FAQs

What is the corporate tax rate in Spain?

Corporate tax in Spain is applied to a company’s net profit, not its total revenue.

The standard rate is 25%, calculated on the profit after deducting costs and expenses.

In some cases, additional deductions may apply, reducing the final tax payable.

Do new companies pay less tax in Spain?

Yes, but not always.

New companies may benefit from a reduced 15% corporate tax rate instead of the standard 25%. However, this only applies during the first profitable tax period and the following one, and only if certain conditions are met.

Is it better to be self-employed or have a company in Spain?

It depends on your specific situation.

In many cases, operating as self-employed is simpler and more flexible, especially in the early stages. A company may become more tax-efficient at higher income levels, but it also involves higher costs and more obligations.

The right structure depends on your income, type of activity and long-term plans.

Do companies in Spain pay tax on revenue or profit?

Companies in Spain pay tax on their profit, not on their revenue.

This means that taxes are calculated after deducting all business expenses from total income. The standard rate of 25% is applied to this net result.