h1

Taxation in Catalonia

The tax system applying in Catalonia features a number of taxes. The main taxes payable by Spanish and foreign companies are corporate tax and business-activity tax

In Spain as a whole, main taxes are Personal Income Tax (Impost sobre la renda de les persones físiques – IRPF) and Corporation Tax (Impost de societats – IS). Among indirect taxes payable on consumption, there is Value Added Tax (Impost sobre el valor afegit – IVA) and Capital Transfer and Stamp Tax (Impost sobre transmissions patrimonials i actes jurídics documentats – ITPAJD).

  • Personal Income Tax (Impost sobre la renda de les persones físiques – IRPF) is a progressive tax applicable to available income. Taxation is based on a progressive rate scale ranging from 15% to 45%. Increases and reductions in assets (generally sales of assets which are not business stock) are taxed at a fixed rate of 15% (one of the lowest in Europe). For foreign workers who have been transferred to Spain, there is a regime to reduce the cost to the employer. There is a special module regime for Personal Income Tax (in which income is calculated on the basis of objective parameters) if the limits stipulated by the laws governing specific activities – especially small businesses.
  • Corporate Income Tax (Impost de societats – IS) is charged on income received by legal persons or companies. The general rate is 30% (25% for SMEs). In addition, the tax rate is noticeably reduced when certain legally established tax benefits, such as those affecting research, development and innovation activities, are applied. In addition, the deduction for reinvestment of profit means that capital gains on certain assets are taxed at 15% provided the amount obtained from their transfer is reinvested under the conditions stipulated by the law.
  • Value Added Tax (Impost sobre el valor afegit – IVA) applies to business activities and is ultimately supported by consumers. Three different VAT rates are applied: 4%, 7% or 16%.
  • Property Transfer Tax and Stamp Duty (Impost sobre transmissions patrimonials i actes jurídics documentats – ITPAJD) applies to transfers between persons other than entrepreneurs and to certain real property transactions. For some forms of property acquisition, the rate applying is 7%; for forming a company, the rate is 1%.        

Town Councils charge various taxes on economic activity:

  • Business Tax (Impost sobre Activitats Econòmiques – IAE) is computed on the basis of objective parameters, such as the activity of the business and the total area of its premises. Private individuals and companies whose turnover amounts to less than 1,000,000 euros are exempt.
  • Property Tax (Impost sobre Béns Immobles – IBI) is charged on property owned, its amount depending on the value of the property and the rate set by the council concerned.
  • Other local taxes include the tax on constructions, installations and building work (ICIO), charged by the value of certain works; the tax on increases in the value of urban land (IIVTNU), which is levied on property conveyancing; and vehicle road tax, charged on the ownership of vehicles.