Tax Deductions for SMEs in Corporate Tax Benefits in Corporate Tax for SMEs with Pension Plans

Small and medium-sized enterprises (SMEs) in Spain can enhance their employees’ financial well-being and optimise their tax burden thanks to recent modifications in Corporate Tax (IS). These changes allow access to deductions for contributions to occupational pension plans

What is Corporate Tax?

Corporate Tax is a levy imposed on companies based on their annual profits. It operates similarly to Personal Income Tax (IRPF) but applies to businesses. Each year, after calculating revenue and expenses, companies pay a percentage of their profits, depending on their size and activity.

Tax Deductions and Benefits for SMEs

SMEs can benefit from:

• Reduction of the taxable base: Contributions to occupational pension plans are deducted from the Corporate Tax.

• 10% deduction on the total tax liability: For contributions made to employees earning less than €27,000 annually.

• Savings on Social Security contributions.

• Incentives to attract and retain talent.

• Contributions are considered deductible expenses in Corporate Tax

 

Simplified Occupational Pension Plans (PPES)

Law 12/2022 introduced PPES for the self-employed and SMEs, allowing them to:

• Deduct up to an additional €8,500 in contributions to occupational pension plans.

• For self-employed individuals, increase deductible contributions by €4,250, up to a maximum of €5,750 annually.

Unlike individual pension plans, PPES are promoted by self-employed associations, professional bodies, or collective agreements.

Key Aspects

• The 10% deduction applies to employees earning less than €27,000 annually.

• For higher salaries, the deduction is proportional.

• Applicable to tax periods starting from 2 July 2022.

At Valero Tax Legal, we can provide expert advice to ensure compliance with your rights and obligations. Email: info@valerotaxlegal.comPhone: 972 697 790WhatsApp Business: +34 644 76 97 24Website: www.valerotaxlegal.com