Corporate Income Tax
Standard rate
25% on resident companies’ worldwide income taxsummaries.pwc.com . Banks, mining, oil/gas etc. face a higher 30% rate. Foreign branches and non-resident companies pay 25% on Spanish-source income.
Reduced rates (2025+)
From 1 Jan 2025, smaller companies pay lower CIT. Companies with annual turnover <€1 million (‘micro-enterprises’) pay 21% on the first €50,000 of taxable profit and 22% on the excess. Companies with turnover <€10 million pay 24% in 2025 (gradually reducing over later years). These rates phase down (e.g. 19–20% and 21% by 2027, as shown in the tax code). (Reduced rates don’t apply to “equity” or investment companies.)
Start-ups and new companies
Newly-created trading companies can pay a 15% rate on profits in the first two profitable years. Emerging start-ups (meeting R&D/job criteria) may apply 15% for up to four years.
Tax base rules
Losses are generally limited to 70%/50%/25% of income depending on size, and certain deductions (e.g. double-tax credits) are capped for larger firms. A new global minimum tax (15%) applies to large multinationals’ profits in 2024+ (Pillar 2) and does not increase the headline CIT rate.
Personal Income Tax (PIT)
Progressive general income
Spanish PIT is progressive (state+regional). For 2025 the state portion is 19% on the first €12,450; 24% on €12,450–20,200; 30% on €20,200–35,200; 37% on €35,200–60,000; 45% on €60,000–300,000; and 24.5% on income above €300,000. Regions levy similar rates, so top combined rates can approach ~49% (e.g. 24.5% state + 24.5% region = 49%). (Actual rates vary by autonomous community.)
Savings income (interest, dividends, capital gains)
Taxed at 19% (up to €6,000); 21% (€6k–50k); 23% (€50k–200k); 27% (€200k–300k); and 30% above €300k. (The top 30% rate for savings income took effect 1 Jan 2025, up from 28%.)
Non-residents (NRIT)
Non-resident individuals pay flat 24% on Spanish-source employment income (19% if resident of EU/EEA). Non-resident withholding tax on dividends and most investment income is 19% (subject to treaty relief).
Tax credits and allowances
Various personal allowances (e.g. for dependents, disability, etc.) apply, but residents face no basic allowance on general income. Double-tax treaties and EU rules apply to foreign income.
Social Security Contributions
Employers
Typical employer contributions total about 30.57% of gross wages. This covers pension/health insurance (“common contingencies” ~23.6%), unemployment (~5.5%), wage guarantee fund (~0.2%), training (0.6%) and other minor items.
Employees
Workers contribute about 6.48% of gross salary (roughly 4.7% for pensions/health + 1.55% unemployment + 0.1% training).
2025 changes
A new “Solidarity Contribution” was introduced in 2025 on high salaries. Earnings above the social-security cap (€4,909.50/month in 2025) incur an extra tax: 0.92% on income up to +10% of the cap (split 0.77% employer / 0.15% employee), 1.00% up to +50% (0.83%/0.17%), and 1.17% beyond (0.98%/0.19%). This will rise gradually to 7% by 2045. In addition, the Intergenerational Equity contribution is 0.80% of wages in 2025 (0.67% employer + 0.13% employee).
Other obligations
Employers must register with social security and remit contributions monthly. Employers also withhold employees’ income tax (IRPF) on payroll based on the progressive rates above. All employers must report payroll and remit taxes electronically.
Value-Added Tax (VAT)
Spain has three VAT rates:
Rate
Applies To
21%
Standard rate (most goods and services)
10%
Reduced rate: certain foodstuffs, water, passenger transport, hotels/restaurant accommodation, cultural events, and home renovation
4%
Super-reduced rate: basic necessities (bread, milk, cheese, eggs, fruits, vegetables, legumes, cereals, etc.), books, newspapers, medicines, olive oil (from 2025), social housing, etc.
Changes for 2025
Temporary pandemic/energy VAT cuts have mostly ended. From 1 Jan 2025, essential foods that had been zero-rated are back at 4%. Olive oil’s VAT rate will rise to 4% (from 0%/5%). Other goods remain at their usual rates.
Other VAT rules
Exports and intra-EU shipments are zero-rated; financial, education and health services are exempt. The VAT registration threshold in Spain is zero (all businesses must register).
Other Taxes
Capital gains (residents)
Taxed at the savings rates (19%–30%) above. Non-resident capital gains on Spanish property or equities are generally 19%.
Dividends
Resident shareholders pay 19%–30% under the savings schedule. Non-resident dividends are subject to 19% withholding (unless reduced by treaty).
Wealth tax
Spain imposes a progressive net wealth tax. Rates vary by region – typically from about 0.2% up to 3.5% on net assets exceeding roughly €700,000 (personal exemptions apply). Some regions (e.g. Madrid) offer full relief (0%). Nonresidents pay it only on Spanish assets.
Other levies
Annual property tax (IBI) and transfer taxes (ITP/AJD on real estate, up to 10-11%) apply at the regional level. Inheritance and gift taxes are also levied by regions with wide variations, but are beyond this summary.
Employment Regulations
Minimum Wage
he 2025 national minimum (SMI) is €1,184 per month (in 14 annual payments, totaling €16,576). This applies universally unless a higher sectoral collective agreement rate exists.
Working Hours
The statutory full-time week is 40 hours (typically Monday–Friday). Employees are entitled to at least a 15‑minute break after 6 hours. By law, overtime is voluntary and must be paid at a premium (at least 125% of normal pay). (Spain has proposed reducing the 40h week to 37.5h from 2025, but this change is under consideration.)
Paid Leave
Annual vacation: All employees get 30 calendar days (≈22 working days) of paid leave per year. Employers must grant at least one continuous 2-week block of holidays. Holidays cannot be “bought out” (paid instead) except upon termination.
Public holidays: Nine national holidays are observed (e.g. New Year, Easter, Labor Day, National Day, Christmas) plus regional/local holidays (total ~14 days/year). Work on a public holiday must be paid as overtime or given as a compensatory day off.
Sick leave: After a 3-day waiting period, employees receive 60% of their contribution base from day 4 to 15, and 75% thereafter. (Employers pay the first 15 days of sick pay; Social Security covers day 16+.) The maximum sick-pay period is 365 days (extendable to 545 days).
Maternity/Paternity: Maternity and paternity leave have been equalized. Each parent is entitled to 16 weeks of fully-paid leave. Six weeks immediately after birth/adoption are mandatory. (Currently both parents get 16 weeks; reforms are proposed to extend total parental leave to 20 weeks with some flexibility.)
Other leave: Employees also get leave for marriage (15 days), moving house (1 day), and bereavement (2–4 days, depending on distance). New parents get 1 paid hour (or two 30-min periods) per day for breastfeeding up to the child’s first year.
Termination and Severance
Notice: Generally, either party must give 15 days’ notice before ending an open-ended contract. Some contracts or high-seniority cases require 30 days or more (and collective agreements may vary).
Fair dismissal: If employment ends for a valid economic, technical, organizational, or production reason, the employee is entitled to 20 days’ pay per year of service, capped at 12 months’ pay.
Unfair dismissal: If a termination is ruled unjustified, severance is 33 days’ pay per year (capped at 24 months). Longer service (>2 years) generally uses the 33‑day scale (for contracts signed after 2012). Severance pay may be reduced by any unemployment benefits received.
Collective Agreements
Sectoral or company-level collective bargaining can improve many of these terms (wages, overtime pay, extra vacation, higher severance, etc.). Employment rules are set by the Workers’ Statute (Estatuto de los Trabajadores) and related laws.
Sources: Official tax guides and legal summaries have been used to compile current 2025 rates and rules taxsummaries.pwc.com taxsummaries.pwc.com europeaccountants.com vatcalc.com remofirst.com remofirst.com , including recent reforms effective in 2024–2025 (tax rate changes, new contributions, VAT adjustments, etc.). This page is intended as a general reference; always confirm specifics with a tax or employment expert for your situation.
