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

The tax treatment of new businesses is a determining factor for their consolidation in the market. Recently, the Directorate General of Taxes (DGT) has specified the conditions under which newly formed companies can access the reduced 15% tax rate provided for in current regulations.

What the DGT has ruled

The inquiry focuses on the application of Article 29.1 of Law 27/2014 on Corporate Income Tax (IS). The technical body has confirmed that newly formed entities can benefit from this reduced 15% tax rate as long as the established legal requirements are strictly met.

For this benefit to be applicable, the company must fulfill two fundamental conditions:

• Not being a holding company: The company must have real economic activity and not be limited to the mere management of assets.
• Meeting activity requirements: The exclusion scenarios related to previous activity that prevent access to this tax rate must not apply.

What it means for you

If you are incorporating a new company, this criterion confirms that the reduced 15% rate is a viable option to optimize the tax burden during the first financial years, provided that the company's structure is oriented toward an effective economic activity. The key lies in the nature of the entity; if the company is incorporated solely for the holding of assets or goods without real commercial or industrial exploitation, it will lose the right to this tax benefit.

What should be done

It is necessary to verify that the corporate purpose and the actual operations of the company deviate from the definition of a holding company. The correct structuring of the activity from the moment of incorporation is fundamental to prevent the Administration from considering that the company does not meet the requirements of Article 29.1 of the Corporate Income Tax Law. It is recommended to analyze the nature of the income and the management of assets to ensure that the entity correctly qualifies for this tax rate.