Understanding Commercial and Tax Law in Spain

Commercial law is a collection of laws that regulates a company’s economic activity. It handles issues such as enterprise, entrepreneurship, business legal entities, accounting, and advertising.

Obligations Under Spanish Commercial Law

Spanish Accounting Law

Any entrepreneur should register all financial movements chronologically, create balance sheets and warehouse inventories, and maintain proper accounting. Commercial societies should have a minute book that records agreements made at annual general meetings.

Competition and Advertising

There are laws to guarantee fair competition and to prevent any unfair competition. Competition law (anti-trust laws) punishes any action that disturbs free competition in the market, such as price fixing or market distribution.

Advertising General Law

Its goal is to ensure advertising is conducted in a faithful way.

Industrial Property and Consumer Defense

Aims to defend new creations, techniques, and special signs. Different types include inventions and distinctive emblems. Because of patents, the inventor of a product has the right to exploit the product for a period of time. Consumer and user protection laws support and protect customers, who have the right to receive compensation for injury or harm from a product or service.

Commercial Registry

It is a public entity and its main objective is to publish companies’ legal statuses. Companies are registered here when they are set up; their books are legalized, and their representatives are inscribed here.

Tax Law in Spain

The purpose of tax law is to obtain the money that the government needs to pay all public expenditures.

Tributes

Tributes are the most important incomes and they have to be paid by citizens. They are classified into:

• Fees: For public services or direct benefits.
• Contributions: Taxes collected by public institutions, from which the whole society benefits (e.g., pavements, street lights).
• Taxes: No direct benefit is obtained, and they have no specific aim (e.g., personal income tax, corporate income tax).

Types of Taxes

Wealth Tax

People who have assets pay this tax.

Personal Income Tax

A direct and progressive tax levied on the income of individuals. Income is determined by the difference between the income earned and the deductible expenses. It is divided into elements: benefits of working/fixed capital/circular capital/economic activity, and profits and losses of assets.

Company Tax

Taxed on the profits of companies. It is a progressive tax, and 25% of the profits need to be paid; it is collected by the Basque Country. There is a reduced tax rate of 15% for microbusinesses that have maintained or increased their workforce.

Tax on Business Activity

A tax only paid by companies that have a turnover of more than 1 million euros.

VAT (Value Added Tax)

A general consumption tax that is collected on every purchase. At present, it is 21%. Certain products and services have a VAT of 10% or 4%. Other services do not have a VAT, such as health, education, or insurance. Companies neither gain profit nor incur loss with this tax, because it goes to the government.