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Export to Spain represents a growing opportunity for Italian companies, thanks to the solid history of economic and commercial relations between Italy and Spain, which benefit from geographical and cultural proximity and similar consumer orientations. Despite global challenges, Italy and Spain they continued to be strategic markets for each other, both as export outlets and as investment destinations.
The country offers a favorable environment for trade, thanks to its moderate tax burden and tax incentives for businesses and investments.
In 2023, Italian exports to Spain are increased by 2.1%, reaching almost 33 billion euros. Spain confirms itself as the third EU market for Italy, supported by a positive trend favored by the dynamism of public and private investments, supported by the European funds of the Next Generation EU plan. Plan de Recuperación, Transformación y Resiliencia Spanish, similar to the Italian PNRR, provides for an allocation of 140 billion euros, the second highest in Europe after the Italian one.
In this article, we will explore the opportunities offered by the Spanish tax regime for foreign investors, highlighting how these can further incentivize exports.
Spain and Italy have signed a Convention against double taxation, in force since 24 November 1980, to prevent tax evasion and facilitate the exchange of information.
The country has a quasi-federal tax system, which grants wide autonomy to each autonomous community. This system allows some areas to be more fiscally advantageous than others, since the regions receive a significant portion of the tax revenue and can autonomously modify the rates of the Personal Income Tax (Impuesto sobre la Renta de las Personas Físicas, IRPF) and other taxes such as property taxes. This fiscal flexibility is favorable for exports, since companies can benefit from more advantageous tax conditions in certain regions, thus reducing operating costs.
You are considered a tax resident in Spain if you stay in the national territory for more than 183 days during the calendar year or if the center of your economic interests or business activity is in the territory.
Non-residents for tax purposes in Spain are subject to the Impuesto sobre la Renta de los Non Residentes (IRNR), which applies only to income produced in Spanish territory.
Recently, Spain introduced significant regulatory updates with Royal Decree 1008/2023, published in the Spanish Official Journal on 5 December 2023.
There Beckham Law, first introduced in 2005, represents an attractive opportunity for expats and their employers. This special tax regime allows people who acquire tax residency in Spain to opt for taxation as non-residents for the first six years, provided they meet certain conditions.
Expats who acquire tax residency in Spain can benefit from a reduced tax rate of 24% on employment income up to €600,000, with a rate of 47% for the excess. In addition, capital gains, dividends and interest earned abroad are exempt from taxation in Spain, while wealth tax is only applicable on assets located in Spain.
Royal Decree 1008/2023 responds to the need to adapt the Personal Income Tax (IRPF) Regulation to the changes introduced by the Startup Law in force from 1 January 2023. The main new features include:
This advantageous tax regime can be particularly useful for those who intend to export to Spain, as it facilitates entry and operation in the Spanish market by reducing the tax burden for transferred employees and entrepreneurs.
To access the tax benefits of the Beckham Law, the following requirements must be met:
The request for application of the favorable tax regime provided for by the Beckham Law must be made by submitting the Module 149 to the Spanish tax authorities, accompanied by documentation demonstrating that the requirements are met. The application must be submitted within the first six months of the date of registration as an employee with the Spanish Social Security Office or of the date of commencement of the provision of services in Spain based on the social security secondment certificate from the country of origin. If successful, a certificate will be issued granting the application of the special regime.
We have already written guides on the conditions and opportunities for setting up a company in countries such as India and United States. For those who wish export to Spain, open a company in the territory, this country represents one of the most interesting destinations for a European entrepreneur. Spain offers a lower IRES rate than Italy and does not apply additional taxes such as IRAP.
Companies resident in Spain are subject to corporate income tax (Impuesto sobre Sociedades, IS) according to the worldwide income principle. The Spanish territory includes mainland Spain, the Balearic Islands, the Canary Islands and the enclaves of Ceuta and Melilla in Morocco. Companies located in the Basque Country, Ceuta, Melilla and Navarra, Ceuta and Melilla benefit from special tax regimes.
Companies considered non-resident are those not registered under Spanish law and without a registered office or management office in the country. They are subject to the non-resident income tax (IRNR), which taxes only Spanish-source income. For resident companies, the IS tax base includes income and capital gains.
With an additional surtax linked to registration with the Chamber of Commerce. Entities subject to this tax include:
A reduced rate of 15% applies to small companies (with profits up to 10 million euros) and new companies for the first two years of profits. Companies operating in the hydrocarbon sector are taxed at 30%.
Non-resident companies that earn income in Spain without a permanent establishment are taxed at 19% if resident in the EU or EEA, and at 24% for other jurisdictions. Capital gains are taxed at 19%. If they operate through a permanent establishment, the rate is 25%, while for the hydrocarbons sector it is 35%. Remittances from branches to the parent company are subject to an additional tax of 19%, except for specific exceptions.
Octagona, with its expertise ininternationalization and business strategies, can guide Italian companies that wish to export to Spain, optimizing their activities to penetrate the Spanish market. By analyzing in depth the tax scenario of the country to which the export is directed, we offer personalized advice that helps companies take full advantage of the available tax benefits and reduce operating expenses, ensuring a more efficient and advantageous management of their international activities.
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