17 jul 2018
Corporate Tax


In Spain, companies bear a tax burden with real rates of 46.9% over profits, vs. an EU average of 40.9%.

“Increasing collection by raising taxes in a mistake “. This is one of the main conclusions of the report “Corporate Taxation” published by CEOE, which includes an in-depth analysis of the tax collection and the contribution borne by companies.  The document highlights that the collection share that comes from companies “is considerably higher than the European average” and it states that “corporate tax rates in Spain are high in comparison to our neighbouring countries and they should go down, not up”.

Report on “Corporate Taxation” published by CEOE
Report on “Corporate Taxation” published by CEOE — ©CEOE

According to CEOE, raising the Corporate Tax burden borne by domestic companies without decreasing the overall tax load by lowering other taxes, such as social contributions borne by the employer “would hinder our companies’ competitiveness, would shrink domestic and international investment and would, in the medium term, lower collection and, thus, achieve the opposite result to what is being sought”.

The report highlights that public revenues borne by companies in relation to total public revenues in Spain amount to 30.4%, while the average for the Eurozone stands at 26.2%. In addition, according to data from the report “Paying Taxes” prepared by the World Bank and PwC every year, the Confederation says that “in Spain, companies bear a tax burden with a real rate of 46.9% over profits, vs. the EU’s average of 40.9%.  This means that, including the effect of all the taxes applicable to companies, the corporate tax burden in Spain is six points higher than the EU average.

CEOE, after analysing the progression of fiscal revenues, highlights that “Spain does not have a tax collection problem”. In fact, the collection for 2017 is set at practically the same level as in 2007, the high in the historic series.

The Confederation also explains that “the reason for the slow recovery in the Corporate Tax collection in comparison to 2007 would mostly be due to lower corporate profits during the crisis”.  Of the total 1.26 million active companies in 2007, 53.59% presented a negative tax base and 46.41% showed a positive tax base. In 2014, 63.09% presented negative tax bases and only 36.91% had positive bases. Of the total number of active companies forecasted for 2017, around 1.13 million, it is expected that around 59% will have negative tax bases and 41% positive tax bases.

The document also reveals that large companies are the ones that collect the most money from the tax on corporate profits.  Collection on Corporate Tax is concentrated in companies with a total turnover of over €100 million.   In fact, these companies contributed in 2014, the last consolidated collection data available, 57.52% of the tax collected, despite only being 2,090 companies, 0.002% of the total.

Businessmen believe that the area where thing could improve is in the fight against the underground economy, which, if reduced, would raise collection by several points.