Tax Benefits for Small-Sized Companies in Spain

What tax benefits are available for small-sized companies in Spain? This special tax regime, governed by Law 27/2014 on Corporate Icome Tax, forms a key part of Spain’s fiscal policy aimed at promoting small and medium-sized enterprises (SMEs). It allows eligible companies to apply certain tax incentives that reduce their overall tax burden, encouraging investment, improving liquidity, and facilitating risk management.

This article provides an overview of the most relevant tax advantages applicable under the regime for small-sized companies.

What Qualifies as a Small-Sized Company?

Annual turnover below €10 million

According to the Corporate Income Tax Law, companies can benefit from this regime if:

• Their net turnover in the previous tax year is below €10 million.

• They do not qualify as a “passive holding entity” under the law.

If the previous tax period was shorter than 12 months, the turnover must be annualised. If the company belongs to a group, the aggregate turnover of all group entities must be considered.

Continuing under the regime after exceeding the threshold

If the entity exceeds the €10 million turnover limit in a given tax year, it may still apply the incentives for the following three tax periods, provided the turnover condition was met in each of the two preceding years.

Key Tax Incentives for Small-Sized Companies

Freedom of Depreciation

Small-sized companies are allowed to freely depreciate new tangible fixed assets or real estate investments, if they increase their average workforce. The eligible investment amount is limited to the result of multiplying €120,000 by the increase in average headcount.

Accelerated Depreciation

Small-sized companies can apply double the maximum straight-line depreciation rate established by the official tax tables to:

• New tangible fixed assets

• Real estate investments

• Intangible fixed assets

This mechanism enables companies to depreciate assets faster, effectively reducing the taxable base and thus deferring tax payments.

Impairment Losses on Receivables

Small-sized companies may deduct impairment losses on receivables to cover the risk of debtor insolvency:

• Up to 1% of the outstanding trade receivables at year-end.

• This deduction is in addition to individually recognised impairment losses.

• It excludes:

  • Receivables already individually impaired.

  • Non-deductible losses under the tax law.

This provision allows companies to anticipate potential non-payments and adjust their taxable income accordingly.

Levelling Reserve

Companies subject to the general corporate tax rate may reduce their taxable base by up to 10%, with a maximum of €1 million per year, by allocating an unavailable reserve from profits.

• The reduction must be reversed within five years, either:

  • As the entity incurs negative tax bases, or

  • At the end of the five-year period.

• The reserve must be booked against current year profits.

• Incompatible with the capitalisation reserve.

This mechanism allows SMEs to smooth their tax liability over time, especially in years with fluctuating profits.

Practical Recommendations

To effectively and securely benefit from these tax incentives, ERDs should:

• Maintain accurate and up-to-date accounting records to demonstrate compliance with eligibility criteria.

• Properly document workforce increases when applying the freedom of depreciation.

• Perform tax planning to optimise the timing and scope of incentives depending on the company’s financial cycle.

• Regularly review turnover levels to confirm continued eligibility under the regime.

These steps ensure a legally compliant and financially efficient use of the available tax benefits.

Conclusion

The special tax regime for small-sized companies provides significant fiscal advantages that can substantially improve the financial position of SMEs in Spain. However, its correct application requires:

• Careful monitoring of legal conditions,

• Strategic tax planning,

• Proper supporting documentation, and

• Consistent alignment between accounting and tax treatment.

Tax incentives must be applied prudently and in a well-documented manner, to avoid future tax risks and ensure legal certainty.

✅ At Adlanter, we have a team of specialists in SME taxation ready to help you apply this regime with legal certainty and design a tax strategy tailored to your business needs.