How corporate tax (Impuesto sobre Sociedades) works for a small company

Terms used

• Impuesto sobre Sociedades — Impuesto sobre Sociedades is Spain's corporate tax, charged on a company's yearly profit after tax adjustments.
• Ajustes extracontables — Ajustes extracontables are tax adjustments added to or subtracted from accounting profit to reach the taxable result.
• Base imponible — The base imponible is the taxable base: the adjusted profit on which the tax rate is applied.
• Cuota íntegra — The cuota íntegra is the full tax amount (taxable base times rate) before deductions and payments already made.
• Empresas de reducida dimensión — Empresas de reducida dimensión are companies with turnover below 10 million euros, which keep special tax incentives.
• Modelo 036 — Modelo 036 is the census form used to register or change a business's tax details, such as choosing the 5/7 method.

Key rules

• General rate: The general company tax rate is 25% of the taxable base.
• Small company rates: With turnover below 1 million euros in the previous period, you pay 19% on the first 50,000 euros of base and 21% on the rest in 2026.
• Rates keep falling: The small company rates reach 15% and 20% from 2028.
• Losses: Tax losses carry forward with no time limit, but each year's offset is capped as a share of the base.
• Advance payments: The 5/7 method is compulsory at 10 million euros of turnover or more and optional below that.

The short version

Corporate tax (Impuesto sobre Sociedades) is a percentage of your company's adjusted accounting profit. The general rate is 25% of the taxable base. Small companies pay lower rates, and the rates fall each year until 2028.

How the tax is calculated

Follow these steps in order. The checklist below sets them out as a tick-list.

1. Start from the accounting profit or loss after tax. You take it from the company's profit and loss account.
2. Make the tax adjustments (ajustes extracontables). You add back items such as non-deductible expenses. You also adjust for differences in depreciation or provisions, and you subtract exempt income. The result is the base before offsets.
3. Reduce it by the capitalisation reserve and by losses from earlier years. The result is the taxable base (base imponible).
4. Multiply the taxable base by your rate. This gives the full quota (cuota íntegra).
5. Subtract deductions, bonuses, withholdings and payments already made. What is left is what you pay.

Which rate applies

Most companies pay the general rate of 25%. Some kinds of company have their own rates. For example, new companies pay 15%, and banks and oil and gas companies pay 30%.

A company with net turnover below 1 million euros in the previous period pays a reduced two-band rate. This does not apply to asset-holding companies. The first 50,000 euros of base are taxed at the lower rate, and the rest at the higher one:

Companies with turnover below 10 million euros are small companies for tax purposes (empresas de reducida dimensión). They keep extra incentives, such as accelerated depreciation and the capitalisation reserve, even if they are above the 1 million euro line for the reduced rates.

Tax losses

If the company makes a tax loss, you can carry it forward with no time limit. Each year you can offset only part of the base before offsets. In 2026 the limit depends on turnover in the previous 12 months:

• Under 20 million euros: 70%.
• 20 to 60 million euros: 50%.
• 60 million euros or more: 25%.

In every case you can offset at least 1 million euros. Keep the accounts and supporting documents that prove the loss. The tax authority can check a loss until 10 years after the filing deadline for the return in which you declared it. Groups and changes of ownership have special rules, so ask your adviser if either applies.

Advance payments during the year

You pay part of the tax during the year, and then settle up in the annual return. There are two methods:

• General method. You pay 18% of the full quota of your last return, less deductions and payments already made.
• 5/7 method. You apply 5/7 of the general rate to the base of the first 3, 9 and 11 months of the year. It is compulsory if your turnover in the previous 12 months was 10 million euros or more. Other companies can choose it by filing Modelo 036 or 037 in February.

Companies with turnover of 10 million euros or more also pay a minimum percentage of the accounting result. It is 23% or 25% for 2026, depending on the type of company. The decision, timeline and calculator below help you choose and plan.

Choosing between options

Which method should you use to calculate your advance payments?

• General method: This is the default if your turnover in the previous 12 months was below 10 million euros and you have not chosen the other method.

• 5/7 method: This is compulsory from 10 million euros of turnover and optional below that if you choose it in Modelo 036 or 037 in February. You apply 5/7 of the general rate of 25% to the base of the first 3, 9 and 11 months of the year.

If your net turnover in the previous 12 months was 10 million euros or more, you must use the 5/7 method, with a minimum payment of 23% of the accounting result, or 25% for 2026, depending on the type of company. Below that, the general method applies unless you opt for the 5/7 method in February.

Timeline and deadlines

• Choose the 5/7 method for advance payments if your turnover is below 10 million euros and you want it, using Modelo 036 or 037: in February of the year it applies

• Pay your advance payments (Modelo 202), using the 5/7 method on the base of the first 3, 9 and 11 months of the year if it applies to you: from 1 to 20 April, 1 to 20 October and 1 to 20 December

• File the annual company tax return (Modelo 200) and deduct the payments already made: from 1 to 25 July of the following year for a calendar-year company

Checklist

• Start from the accounting profit or loss after tax shown in your profit and loss account.

• Add or subtract the tax adjustments (ajustes extracontables), such as non-deductible expenses, differences in depreciation or provisions, and exempt income.

• Reduce the result by the capitalisation reserve and by tax losses from earlier years to reach your taxable base (base imponible).

• Multiply the taxable base by your rate to get the full quota (cuota íntegra), then subtract deductions, bonuses, withholdings and payments on account to find what you pay.

• Keep the accounting records and supporting documents that prove each tax loss you carry forward.

• Check whether your turnover is below 10 million euros, so your company keeps the small-company incentives such as accelerated depreciation.

Estimate your company's yearly corporate tax

Work it out

What you enter

• Taxable profit for the year, before using past losses (EUR): Your accountant's draft of the corporate tax return, or your profit and loss account adjusted for tax.
• Tax losses from earlier years not yet used (EUR): Your accountant's loss records from earlier company tax returns.
• Net turnover in the previous year (EUR): Last year's accounts or your company tax return.
• Years with a positive taxable base before this one (years): Your earlier company tax returns. Enter 0 if this is your first profitable year.
• Full tax due on your last annual return, before deductions (EUR): The last company tax return you filed (the cuota íntegra line).
• Deductions and payments already made on that return (EUR): The same return, in the deductions and payments sections.

Figures used

• General tax rate: 0.25 ratio (as of 2016)
• New company rate: 0.15 ratio (as of 2025)
• Reduced rate on the first 50,000 euros of base: 0.19 ratio (as of 2026; check the current figure before you rely on it)
• Reduced rate on the rest of the base: 0.21 ratio (as of 2026; check the current figure before you rely on it)
• Size of the first rate band: 50,000 EUR (as of 2025)
• Minimum loss offset allowed: 1,000,000 EUR (as of 2016)
• Share of last return's tax paid per instalment: 0.18 ratio (as of 2016)

Worked example (with Taxable profit for the year, before using past losses 120,000 EUR, Tax losses from earlier years not yet used 30,000 EUR, Net turnover in the previous year 800,000 EUR, Years with a positive taxable base before this one 3 years, Full tax due on your last annual return, before deductions 20,000 EUR, Deductions and payments already made on that return 2,000 EUR)

When the sum misleads

• The rates used are for 2026. The reduced rates fall each year, so use the schedule for the year you are filing.
• The two-band reduced rate does not apply to asset-holding companies, which pay the general rate. Ask your accountant if this could be you.
• Companies with net turnover of 10 million euros or more in the previous 12 months must use a different instalment method, based on the year's profit so far, with a minimum payment. Ask your accountant for that figure.
• Smaller companies can also choose the profit-based instalment method by notifying the tax agency in February.
• Groups and companies that changed owners face extra limits on using past losses, so check before relying on the loss figure.
• Losses can be carried forward with no time limit, but keep the accounts and documents that prove them.

Frequently asked questions

What rate does a small company pay in 2026?

In 2026 a company with turnover below 1 million euros in the previous period pays 19% on the first 50,000 euros of base and 21% on the rest. This does not apply to asset-holding companies. Companies outside this group pay the general rate.

How will the small company rate change after 2026?

The small company rate keeps falling each year: 17% on the first 50,000 euros and 20% on the rest in 2027, then 15% and 20% from 2028. The same turnover limit of 1 million euros applies each year.

Do I keep tax incentives if my turnover is above 1 million euros?

Yes, if your turnover is below 10 million euros your company counts as an ERD (empresa de reducida dimensión) and keeps incentives such as accelerated depreciation and the capitalisation reserve. The lower two-band rates, however, need turnover below 1 million euros.

Can my company carry forward a tax loss, and how much can it offset each year?

Yes, a tax loss can be carried forward with no time limit, but each year's offset is capped. In 2026 the cap is 70% of the base before offsetting for turnover under 20 million euros, 50% for 20 to 60 million and 25% for 60 million or more.