Corporate tax for a Spanish limited company (S.L.)

Main obligations of an S.L.

Obligation	Form	When
Corporate tax return	Modelo 200	25 days after six months from year end (July)
Payments on account	Modelo 202	April, October, December, if applicable
VAT returns	Modelo 303 and 390	Quarterly and annual
Withholdings on salaries and rents	Modelos 111, 115 and annual summaries	Quarterly and January
Annual accounts	Approval and filing at the Mercantile Registry	Within seven months of year end
Ultimate beneficial owner declaration	With the accounts	Annually

Rates

The general rate is 25%. Newly created companies pay 15% in the first year with profit and the following year. Small companies with low turnover benefit from reduced rates that are being introduced progressively. We apply the rate that corresponds to each year.

Taking money out

Directors' salaries are deductible for the company and taxed as general income for the director; dividends are taxed on the savings scale. The balance between salary and dividends is one of the main planning decisions.

Companies owning property

Companies that own holiday homes for the shareholders' private use face specific tax issues, including the possibility that the free use is treated as income. Holding property through a company should be analysed carefully. See VAT on property.

Accounting

Accounts must follow the Spanish chart of accounts. We keep the books and file all returns. See accounting services, autónomo or company and the tax calendar.

An illustrative example

Based on situations we commonly see; not a specific client. A Dutch couple running a boat charter business in Mallorca as autónomos set up an S.L. as profits grew. In the first two profitable years the company paid the reduced rate, and a balanced mix of salary and dividends lowered their total tax.

How Castell.tax can help

We keep the books and file the tax returns of autónomos and companies owned by foreigners in the Balearic Islands: VAT, quarterly payments, corporate tax, annual accounts and payroll withholdings, with reports in English or German. See our accounting service and self-employed service, or contact us for a monthly fixed fee.

This page is published by Castell.tax, the tax practice of Castell.law in Palma de Mallorca. It is general information; tax rules and rates change, so check your case with us before filing.