2025 ENG

In Spain, there is a widespread perception that taxes are high and that “we pay more than other countries in the European Union.” But what do the actual data say? Below, we review recent figures, common myths, and what we can really observe when comparing taxation across countries.

Currently, the tax burden in Spain (tax and social security revenue as a percentage of GDP) has increased significantly, reaching around 38%, although it remains below the EU average, which is approximately 41%. Specifically, Spain is still below countries like France, Germany, or the Nordic countries, which are known for their strong welfare states.

It is true that Spain has one of the highest top personal income tax rates (IRPF, in Spanish) in Europe. However, the tax system has become more progressive, as we have mentioned in previous blog posts. This means that those with higher incomes pay a greater proportion of their income in taxes, while those earning the minimum wage bear a lower tax burden, for example, they pay little or no income tax.

On the other hand, Spanish companies face a relatively high tax burden compared to other EU countries, and regulatory complexity especially affects SMEs, according to
data from the Institute of Economic Studies (IEE). Even so, it is important to consider available tax incentives, regional deductions, effective tax rates, and other mechanisms that businesses may benefit from.

Ultimately, the answer to our question is: only in some specific areas. Most citizens’ perception of “paying more” stems from the feeling that public services are not up to expectations, considering the total amount of taxes and contributions paid.

Lucía Luengo Aguado.

With the end of summer and after the close of the 2024 financial year, the filing of corporation
tax and annual accounts, the tax agenda is reactivated for a new financial year. So, we wanted
to return from the summer holidays by informing you of the deadlines and new developments
for this new tax year, which affects companies and foreign investments. This advance notice
can help you to carry out optimal tax planning for companies and investors.
Corporate Tax.

The latest amendment to Law 7/2024 introduces significant changes to corporate tax rates,
with the aim of gradually reducing the tax burden on SMEs and micro-enterprises:

 General Rate: The general corporate tax rate remains at 25%.
 Small Entities (ERD): For entities whose income for the immediately preceding tax
period is less than €10 million, the tax rate will be progressively reduced in each tax
period:
– 2025: 24%
– 2026: 23%
– 2027: 22%
– 2028: 21%
– 2029 and onwards: 20%.
 Micro-enterprises: For entities whose income for the immediately preceding tax
period is less than €1 million, the tax rate will be progressive:
– 2025: 21% for the first €50,000 of taxable income and 22% for the remainder.
– 2026: 19% for the first €50,000 of taxable income and 21% for the remainder.
– 2027: 17% for the first €50,000 of taxable income and 20% for the remainder.

Consequently, tax rates will fall in subsequent tax periods, with the aim of improving business
competitiveness and promoting sustainable economic growth.
You can find more detailed information on the new tax rates in our MDG Tax Pills at the
following link: https://mdgadvisors.es/es/new-corporate-tax-rates-in-force-from-2025-2/
VAT and Verifactu.

As we discussed in previous articles, the big news is Verifactu, which will come into effect on 1
January 2026 and requires a code and QR on all invoices, preventing unregistered
modifications. Companies will have to adapt their software to automatically communicate with
the tax authorities when exchanging invoices, which will involve a major administrative
adjustment for companies.

If you would like to learn more about electronic invoicing and its implications, we encourage
you to read the following article: https://mdgadvisors.es/es/la-facturacion-electronica-opcion-
u-obligatoriedad/

New reporting obligations from a financial perspective.

From 2026, the tax authorities will receive monthly information on all electronic payments,
including Bizum, cards and POS terminals, regardless of the amount, according to Order
HAC/747/2025. Self-employed workers and companies do not submit this data, but they must
ensure that their declared income matches what the banks will send, in order to avoid tax
discrepancies. The measure comes into force in January 2026, so it is recommended that you
review your invoicing and justify all income.

In conclusion, the changes brought about by 2025 affect many areas of business activity, so
anticipating these tax changes not only helps to avoid penalties but also allows you to optimise
the management of income and expenses, take advantage of tax benefits and plan
investments strategically. Staying informed and acting in advance allows you to minimise risks,
optimise deductions and avoid unpleasant surprises at the end of the year. Each case is
different, so please do not hesitate to contact us for any clarification.

Carlos Pérez Moreno.