The lower tax rate for a new company's first profitable years

Key rules

• Rate: A qualifying new company pays 15% on its first profitable year and the year after.
• Loss years: Years with a loss or no positive base do not use up the benefit.
• Claiming: You claim the rate in your annual return, with no separate application.
• Records: Keep proof that each condition was met, because the tax agency can check later.

Do you qualify?

A qualifying new company pays 15% instead of the general rate on its first profitable year and the year after. To qualify, all of these must be true:

• The activity is new. Your company did not carry it out before under another identity. It was also not transferred or inherited from another company or person.
• The company is new to tax. It was never a taxpayer before, and it is not part of a group of companies.
• It is not an asset-holding entity. A company that mainly holds assets does not qualify.
• The shareholder test is met. In the year of creation or the year after, no more than half of your shareholders may have carried out the activity before.

Miss one condition and you pay the general rate.

How long does it last?

The count starts at your first period with a positive taxable base, not at incorporation. Early years with a loss or no positive base do not use up the benefit. You pay the general rate in those years. Then you get the 15% rate for the first profitable period and the next one. After that, you go back to the general rate.

The 15% rate was kept for new companies in the latest reform.

How to claim it

You do not need a separate application. Tick the newly created company box in the tax rate section of your annual company tax return, Modelo 200. The exact box and layout can change from year to year, so read the current form.

Declare your start of activity with Modelo 036 or 037, the tax census forms. This lets the tax agency see that the activity is new. The tax agency can check later that you met every condition, so keep records that show each one.

Is there a longer rate for startups?

Yes. Innovative, scalable startups can get a 15% rate for the first profitable year and the next three years. They also get other benefits. To get it, you need certification from ENISA, the state innovation company. It is a separate route with stricter conditions, such as being unlisted, based in Spain and recently created. Ask ENISA if your company fits.

The timeline, checklist and FAQ below walk you through the steps.

Timeline and deadlines

• Declare the start of your activity with Modelo 036 or 037, the tax census forms: when you start the activity

• Pay the general rate in any early periods with a loss or no positive base; they do not use up the benefit: before your first profitable period

• Apply the 15% rate by ticking the newly created company box in the annual return for that period: first tax period with a positive taxable base

• Apply the 15% rate again in the same way: the tax period right after your first profitable one

• Go back to the general rate: from the third period onward

Checklist

• Confirm the activity is new: you did not carry it out before under another identity, and it was not transferred or inherited from another person or company.

• Check that your company is not an asset-holding entity.

• Ask ENISA, the state innovation company, about startup certification if your company is innovative and you want a longer reduced rate.

Frequently asked questions

Do loss-making years use up the new-company rate?

No, loss-making years do not use up the new-company rate, because the count starts at your first year with a positive taxable base. The 15% then applies to that year and the one after. Years with a loss before that do not count.

Do I have to apply to the tax office for the new-company rate?

No, you do not apply separately for the new-company rate; you claim it in your annual company tax return. You still declare the start of your activity when you begin, so the tax agency can see the activity is new.

Is there a longer reduced rate for startups?

Yes, a certified startup can pay 15% for its first profitable year and the following three years, which is longer than the new-company rate. To qualify, the company must be new or within 5 years of incorporation (7 for biotech and certain sectors), unlisted, based in Spain and innovative. You request certification through ENISA, the state innovation company, with a business plan.

Can a company that already paid tax before get the new-company rate?

No, a company that was a taxpayer earlier cannot get the new-company rate. The same goes for a company that is part of a group or that only holds assets. Ask an adviser before you assume you qualify if your structure is mixed.