New companies may be taxed at 15% if they meet activity requirements

The incorporation of a new economic entity brings the possibility of accessing preferential tax treatment during its first fiscal years. The Dirección General de Tributos (DGT) has clarified the conditions under which newly created companies can apply the reduced tax rate for Corporate Income Tax (Impuesto sobre Sociedades).

What the DGT has ruled

The tax administration establishes that newly created entities that begin an economic activity may be taxed at the reduced rate of 15% during the first period with a positive tax base and the following one. However, this benefit is not automatic and is subject to the absence of exclusion scenarios defined in current regulations.

The ruling indicates that entities will not be able to benefit from this reduced rate in the following scenarios:

• When the economic activity has been transferred by related persons or entities.
• When the activity was carried out the previous year by an individual who holds more than 50% ownership in the new entity.
• When the entity is part of a group of companies, in accordance with the provisions of the Commercial Code.

What it means for you

If you are in the process of incorporating a company or have recently started an economic activity, compliance with these requirements will determine your initial tax burden. The benefit is designed to encourage the start of new activities, but the regulations seek to prevent it from being used for the mere reorganization of existing businesses or for the transfer of activities between related parties to reduce tax pressure.

What you should do

It is necessary to analyze the history of the activity that the new entity is going to develop. You must verify whether there has been a previous transfer of assets or activities by related partners or entities, as well as the ownership structure to ensure that the aforementioned exclusion scenarios are not met. The correct classification of the activity and the corporate structure are decisive for the application of the 15% rate.