Commercial and Tax Law for Businesses in Spain

Posted on Mar 21, 2025 in Law

Commercial Law

Commercial law regulates the economic activity of enterprises. It addresses issues such as entrepreneurship, legal and accounting matters, advertising, and consumer protection. The core of commercial law is the Commercial Code, which governs trade, commercial contracts, and accounting obligations of firms. However, the code doesn’t cover all aspects of commercial law, leading to the existence of special laws, including:

  • Regulations of the Commercial Register
  • Patent and Trademark Laws
  • General Law on Advertising
  • Corporations Act
  • Bankruptcy Law

Companies usually operate for profit, but they must respect a set of rules, summarized as follows:

  1. Accounting Standards: These are listed in the Commercial Code and mandate orderly accounting practices, presentation of annual accounts, and maintenance of a minute book (including agreements of General Meetings).
  2. Rules on Competition and Advertising:
    • Competition Law determines which behaviors may restrict competition (e.g., pricing regardless of supply and demand) and sets fines.
    • Advertising Laws determine actions that may harm others, such as unfair, deceptive, or subliminal advertising.
  3. Rules on Industrial Property: These are listed in the Patent and Trademark Law, allowing exclusive use of new inventions for a certain time or a merchant’s name or logo indefinitely. Patents and trademarks must be registered with the Industrial Property Registry.
  4. Rules on the Commercial Register: Commercial registration is a state agency that aims to publicize the legal situations of registered companies. The Commercial Register is responsible for registering businesses, legalizing ledgers, and appointing experts.

Tax Legislation

Tax legislation is primarily formed by the General Tax Law, which establishes the legal framework for taxes. It defines taxation concepts, identifies working sets, and sets procedures for tax management.

Taxes

Taxes are the most important class of public revenue for the state budget. They finance public spending and economic activity. There are three main types:

  • Fees: Payments made by citizens to a public entity for providing a public service or carrying out an activity (e.g., entrance to a museum, enrollment in a public university).
  • Contributions: Taxes paid to a public entity by an individual where the profit motive affects a collectivity.
  • Taxes: Payments required by the government without direct compensation to the taxpayer. These are further divided into:

Direct Taxes

Direct taxes are levied on individuals or companies for obtaining a benefit or owning assets.

  • Income Tax: Levied on individuals who have received income from labor, capital, or other sources.
  • Corporation Tax: Corporations pay this tax on their profits.
  • Tax on Economic Activities (IAE): Paid for carrying out a professional, entrepreneurial, or artistic activity.
  • Capital Gains Tax: Levied on assets valued above certain minimums (until 2007, the minimum was €90,000).

Indirect Taxes

Indirect taxes are paid when acquiring a good or service.

  • Value Added Tax (VAT): A consumption tax levied on:
    1. Delivery of goods and services by entrepreneurs and professionals.
    2. Intra-community acquisitions of goods.
    3. Imports of goods by entrepreneurs, professionals, or individuals.
  • Transfer Tax (ITP): Paid when transferring businesses, homes, or other assets between individuals.
  • Excise Duty: Levied on the manufacture and import of certain goods, including:
    1. Tax on Tobacco
    2. Tax on Hydrocarbons
    3. Tax on Electricity
    4. Excise Duty on Alcoholic Beverages