At the end of last year, the Official State Gazette in Spain (Boletín Oficial del Estado) published the details of a range of new tax regulations introduced by Law 7/2024 on 21st December 2024.
This was then followed by Royal Decree-Law 9/2024 on 24th December, which set out several amendments, extensions, and additions to Law 7/2024. However, this was repealed on 22nd January 2025.
So, which new tax rules have been enforced and which have been dismissed? How will these changes affect individuals living and working in Spain and businesses operating in the country?
Keep reading to learn how the latest legislation will impact the current, future, and past tax years, and find out what the team at Manzanares Lawyers can do to help you with Spanish tax laws in 2025.
Spanish Corporate Tax changes
⦿ Large company restrictions – From 1st January 2024, companies with a net turnover of €20 million or less will have a limit of 70% for offsetting tax losses. The limit is 50% for net turnovers between €20-60 million and 25% for net turnovers above €60 million. Deductions for double taxation cannot exceed 50% of total tax liability.
⦿ Extension of limitation on taxable income in tax groups – The limit for offsetting individual tax losses in a tax group determines the group’s taxable income by adding 100% of positive tax bases but just 50% of individual tax losses for each entity in the group. Initiated in 2023, this has been extended to also apply to 2024 and 2025.
⦿ Increased capitalisation reserve – From 1st January 2025, the capitalisation reserve, which allowed corporations to reduce their taxable income by 10% of their increase in equity, is increased to 20% (or 25% for companies with net turnovers below €1 million) and up to 30% if the corporation meets specific criteria for the year.
⦿ Reduced tax rates – From 1st January 2025, micro-enterprises and small entities in Spain will face gradually lowered tax rates. The planned reductions for Company Tax rates are as follows:
Micro-enterprises with an annual turnover below €1 million:
- 2025 – 21% for the first €50,000 and 22% for the excess
- 2026 – 19% for the first €50,000 and 21% for the excess
- 2027 – 17% for the first €50,000 and 20% for the excess
Small entities with an annual turnover between €1-10 million:
- 2025 – reduced from 25% to 24%
- 2026 – reduced to 23%
- 2027 – reduced to 22%
- 2028 – reduced to 21%
- 2029 – reduced to 20%
The repeal of Royal Decree-Law 9/2024 does not affect these reductions.
Changes to VAT in Spain
From 1st January 2024 to 30th September 2024, the VAT (Value Added Tax) rate on some essential food items was reduced to 0% temporarily. This then increased to 2% between 1st October 2024 and 31st December 2024.
From 1st January 2025, the VAT rate will revert to 4%, applying to basic items such as flour, bread, milk, cheese, eggs, cereals, fruits, vegetables, tubers, and legumes. This rate also now applies to olive oils (down from 5% in the first half of 2024).
These VAT changes reflect the Spanish government’s aims to regulate food prices for businesses and consumers, ensuring affordability for essential items like those mentioned above.
New Complementary Tax in Spain
The Spanish government has introduced a new Complementary Tax to guarantee a minimum level of tax for large domestic groups and multinational groups with consolidated revenue of €750 million or more.
Wherever they operate, from 1st January 2024, a minimum effective global tax rate of 15% will apply if the group reported a net turnover of at least €750 million in two out of four of the previous tax years.
Though the Complementary Tax won’t be due until 2026 for groups whose turnover exceeds €750 million in 2024 and 2025, it will be important to prepare for this tax by analysing its impact in 2025 ahead of the 2026 accounts.
Spanish Personal Income Tax changes
⦿ Increased marginal rates for savings tax base – From 1st January 2025, savings income exceeding €300,000 will be subject to a personal income tax rate increase from 28% to 30%. This also applies to beneficiaries of Beckham’s Law.
⦿ Exemption threshold increase – The annual earnings threshold for the obligation to file a personal income tax return was due to increase to €15,876, but will remain at €15,000 after the repeal of 9/2024.
⦿ Second payer limit extension – The gross employment income limit for declaring income with two payers or more was due to increase from €1,500 to €2,500, but this was also repealed.
⦿ Extension of energy efficiency deductions – Despite the intention to extend tax deductions for energy improvements to homes and the purchase of electric vehicles until 31st December 2025, these will no longer be available.
In 2025, IRPF (Impuesto sobre la Renta de las Personas Físicas) personal tax returns must be filed for the 2024 tax year and any tax due must be paid between 2nd April 2025 and 30th June 2025.
Professional advice on Spain tax laws
The Spanish tax reforms that apply to previous tax years may affect your filings in 2025, so it’s important to check when each measure takes effect and which tax periods will be impacted.
Understanding these changes and preparing in advance is crucial to ensure compliance with the Spanish tax authorities, especially for those navigating non-resident tax in Spain.
However, we know this may be difficult for non-Spanish speakers, which is why our English-speaking Spanish lawyers are on hand to help clarify national and regional tax obligations.
So, if you need assistance calculating, filing, and paying taxes in Spain, please don’t hesitate to contact us by phone or email and benefit from the expert advice of the multilingual Manzanares Lawyers team.
