Are the financial expenses deductible from the Corporation Tax in Spain?

Company tax in Spain. In order to consider whether the financial expenses are deductible from the Corporation Tax in Spain, we have to take into account a double-sided limitation. The company tax in Spain is the so known Impuesto sobre Sociedades.

The net financial expenses are deductible with a limit of 30% of the trading profit of the fiscal year. Accrued interest on personal and mortgage loans are understood to be financial expenses.

Taking into account such limitation, the following expenses shall NOT be considered as deductible in general terms:

1) The financial expenses arising from the debts with entities of groups for the acquisition, for other entities of the group, of shares in the stock capital of own assets of any type of entities or

2) the contribution to the stock capital or own assets of other entities in the group.

Having such been considered, it is understood that this regulation is not applicable to the financial expenses accrued for debts for the financing of other intragroup transactions, such as the acquisition of real estate investments, but the following general limitation will be applicable.

General limitation to the deductibility of the financial expenses.

The net financial expenses are deductible from the Corporation Tax with a limit of 30% of the trading profit of the fiscal year. In any case, those financial expenses not exceeding one million euros are deductible.

Enjoy the fiscal advise from your expert tax advisors at Arcos & Lamers Asociados, your accountant, fiscal advisor and lawyer under one roof. Contact now one of the Spanish company tax specialists of our firm for any inquiry.

María Teresa Arcos, lawyer in Marbella.

Wim Lamers, economist in Marbella.