Decrease of corporate tax in Spain

05.06.2014

Prime Minister of Spain, M. Rajoy, said that the last 12 month were turn changing for the Spanish economy. Perspectives of the growth and positive changes in job market can be noticed.

Rajoy also talked about planned tax reform in the country. It probably will be approved by the Ministers Council in timeframe between 13^th and 20^th of June, 2014. Reform includes the decrease of PIT, the same rate of VAT and decrease of corporate tax rate from 30% to 25%.

Despite the fact that reform will take place for several years, the decrease of corporate tax rate is expected to happen next year.

Source: http://www.lamoncloa.gob.es/IDIOMAS/9/Presidente/News/2014/20140603_TheEconomist.htm

Expert’s opinion

In time of the full economy downfall, crisis and complicated situation, Spanish authorities take seemingly logical steps. Decrease of PIT may stabilize labor relations in the country, decrease of corporate tax may attract foreign investments into the country and develop business sphere. But the fast and big decrease of the rates is not going to happen. The corporate tax rate of 25% in EU is not competitive enough.(There are jurisdictions that offer lower rate: Cyprus – 12,5%, UK – 21%, Bulgaria – 10%, Latvia – 15%, Estonia – 0% under condition of non distribution of profit). Therefore, Spain is unlikely to get attention from foreign investors.

Alexandra Mihno ( Lawyer, Honest&Bright)