B Law & Tax
13 July 2023

Tax Advisor: Corporate Tax deductions

In the year 2023, capital companies, such as corporations and limited companies, are subject to a general tax rate of 25%. However, it is important to mention that there is a reduced rate for small companies, which represents a fiscal novelty in that year. Additionally, there is a 15% tax rate applicable to newly created companies.

As for other legal entities, the corporate income tax varies. For example, NGOs and non-profit entities can benefit from a tax rate of 10%, investment funds and bank asset funds are taxed at 1%, while tax-sheltered cooperatives are taxed at a rate of 20%.

In terms of filing, the corporate income tax return is made through form 200 and must be filed between July 1 and July 25, provided that the tax period coincides with the calendar year. Otherwise, the payment is made within 25 days following the 6 months after the closing of the corresponding tax period. In addition, quarterly self-assessments are also required to be filed in certain cases.

Changes in 2023

– A new reduced corporate income tax rate of 23% has been established, replacing the previous rate of 25%. This reduction applies to those companies that had a turnover of less than 1 million euros in the previous year, determined according to sections 2 and 3 of the Corporate Income Tax Law.

– An accelerated depreciation regime has been implemented for certain vehicles, such as FCVs, FCHVs, BEVs, REEVs or PHEVs, which enter into operation between 2023 and 2025 and are intended for economic activity. These vehicles may be depreciated on a straight-line basis twice as fast as established in the officially approved depreciation tables, according to the definitions in Annex II of Royal Decree 2822/1998, which approves the General Vehicle Regulations.

– Also, new features have been introduced in the tax regime of the Balearic Islands, similar to the regime of the Canary Islands. This special regime, with a duration of 6 years, offers tax advantages such as tax rebates for agricultural, industrial, fishing and livestock companies established in the archipelago. These measures are included in the General State Budget Law.

– New tax benefits have been implemented for startups or emerging companies, as part of the State’s efforts to encourage entrepreneurship and innovation. Among these benefits is the possibility of a maximum annual deduction of up to €100,000, which these companies can apply. In addition, the deduction percentage has been increased to 50%, compared to the previous 30%.

– The Tax Agency also reports on various deductions to which one is entitled when carrying out certain activities. These include the deduction for R&D&I, which covers the design and preparation of samples for new product launches, technological innovations and research activities. In addition, there are deductions for investments in film productions, job creation, business contributions to corporate social security systems, employment of disabled workers and investments made by port authorities.

– It is important to note that each Autonomous Community may offer additional deductions, especially in areas related to investments in the environment.

B Law & Tax International Tax & Legal Advisors.

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