Newly created companies may apply the reduced 15% rate for Corporate Income Tax

The tax treatment of new companies is a determining factor during their consolidation phase. Recently, the Dirección General de Tributos (DGT) has clarified the scope of the tax benefit intended for newly created entities in Corporate Income Tax (Impuesto sobre Sociedades, IS).

What the DGT has resolved

The inquiry focuses on determining whether a newly created entity can benefit from the reduced 15% tax rate provided for in Article 29.1 of the Corporate Income Tax Law (Ley del Impuesto sobre Sociedades, LIS). The resolution confirms that this benefit is applicable as long as the legal requirements established in current regulations are strictly met.

To access this reduced rate, the entity must meet the following criteria:

• Economic activity: The company must carry out a real and effective economic activity.
• Nature of the entity: It cannot be a holding company (entidad patrimonial).
• Corporate structure: The entity must not be part of a group of companies.

The DGT ratifies that being a newly created entity does not prevent access to the reduced rate, provided that the company's structure and activity comply with the provisions of the LIS and the Commercial Code.

What this means for you

If you are incorporating a company, this criterion confirms that the 15% benefit is a viable option to optimize the tax burden during the first years of activity. However, the application of this rate is not automatic simply by virtue of being a recent company; it requires management to ensure that the company does not fall under the classification of a holding company and that it maintains its independence from other business groups.

What should be done

It is necessary to verify that the economic activity carried out by the company is genuine and properly documented. Likewise, the shareholding structure and the relationship with other entities must be monitored to prevent the company from being considered part of a group, which would nullify the right to the reduced rate. Given the complexity of interpreting economic activity and the nature of the entity, it is recommended to assess the specific situation of each company before applying this tax rate.