Newly created companies may benefit from a 15% tax rate under specific conditions

Entities starting their economic activity benefit from a tax incentive in Corporate Income Tax (Impuesto sobre Sociedades) that allows for a reduction in the tax burden during their initial fiscal years. However, the application of this benefit is not automatic and depends on strict compliance with certain criteria regarding independence and the origin of the activity.

What the DGT has ruled

The Directorate General of Taxes (DGT) has clarified that newly created entities may apply the reduced tax rate of 15% during the first period with a positive taxable base and the following one. Nevertheless, this benefit is excluded in the following scenarios:

• When the economic activity has been transferred from an entity related to the new company.
• When the activity was carried out by a partner who held more than a 50% stake in the previous year.
• When the entity is part of a subordinate business group, in accordance with the provisions of the Commercial Code.

What it means for you

If you are incorporating a company, access to the reduced 15% rate is an opportunity to improve cash flow during the first years of operation. However, you must take special care with the structure of the incorporation process. If the new company is created to absorb an activity that already existed in another company within the same group or held by a majority partner, the tax administration will consider it not to be a new activity, thus losing the right to the reduced rate.

What you should do

It is necessary to analyze the traceability of the economic activity that the new entity will develop. Before proceeding with incorporation or the transfer of assets, you must verify whether there is a prior link or a majority stake by partners that could trigger the legal exclusions. Assessing the corporate structure and the origin of the assets is fundamental to determining whether the entity complies with the requirements of the Corporate Income Tax Law.