In the world of taxes, the Tax on Economic Activities occupies a special place in Spain. This local tax is levied on the exercise of business, professional or artistic activities. Therefore, if you are doing business in Spanish territory, the IAE is something you should be aware of.
Entities with a net turnover of €1,000,000 or more are obliged to file a tax return. This applies both to local companies and to Non-Resident Income Tax (IRNR) taxpayers operating in Spain through a permanent establishment.
To calculate the INCN, all the economic activities you carry out are taken into account. If you are part of a group of companies, the INCN is calculated taking into account all the entities in the group.
The management of the IAE is mainly the responsibility of the local councils, and those entities that must file the tax return will do so by means of form 840 for the additions, cancellations or variations to be reported on an annual basis.
It is important to mention that not all taxpayers are obliged to pay IAE, and there are several important exemptions to take into account:
– State, autonomous communities and local entities.
– Entities that start a new activity in Spain will not have to pay IAE during the first two years.
– Individuals
– Entities with an INCN of less than 1.000.000 €.
– Entities managing the Social Security.
– Public research bodies and certain educational establishments
– Associations and foundations dedicated to the assistance and rehabilitation of people with disabilities. In this case, it has a mandatory nature
– Spanish Red Cross.
– There are exemptions included in certain international agreements.
This December it is especially important to review the obligations of this tax, as if an entity previously enjoyed one of the exemptions listed above and as of 2025 knows that it will no longer do so, it must notify this in December. If you have any doubts about this ·procedure, MDG Advisors is at your disposal.
Isabel María Díaz Rubio
