HOW ARE THE THREE MAIN TAXES IN SPAIN?
Main taxes in spain
Spanish tax system is similar to the existing in other countries of the European Union. There are three main taxes in spain:
VAT, Value Added Tax (IVA, Impuesto sobre el Valor Añadido), with three tax rates: general rate of 21% for most of the products and services; reduced rate of 10% for some products (food) or services (restaurants, etc) and superreduced rate of 4% for some basic products (bread, milk, etc.). Some services are VAT exempt e.g. health and educational services, although VAT is a tax to check case-by-case, for each product and service.
The VAT declarations can be submitted to the Tax office (Agencia Tributaria) every quarter or every month, depending on the revenues and the features of the company.
Corporate Tax (Impuesto de Sociedades), with a general tax rate of 25% of the profits of the company . This rate can be reduced in some cases, for new companies in the first two years (15%) and with deductions (R&D mainly). There are some specific advantages for SMEs (fast depreciation, etc.)
Income Tax (IRPF, Impuesto sobre la Renta de las Personas Físicas), that taxes personal incomes (salaries, rentals, interests, dividends, etc.). The Spanish Income Tax splits the incomes in two parts: general incomes (tax rate from 0% to around 46% in some parts of Spain) and saving incomes (dividends, interests, capital gains, et.), that pay between 19 and 23% of income tax.
In case of salaries there is a withholding tax that the company takes to the employee and pays to the Tax office monthly or quarterly. At the end of the year the employee declares the salary with other posible incomes.
There some other taxes in Spain as Impuesto sobre Actividades Económicas, Impuesto sobre Bienes Inmuebles, but in this case the amounts are usually prepared and directly charged by the tax authorities.
One important point about taxes in Spain is the fact that there are at least three levels of tax administration (state, Comunidad Autónoma and municipal/local), so sometimes it is not easy to understand the responsible for each tax.