Tax Incentives for SMEs: Can Your Business Benefit?
Businesses classified as Small Business Entities (SBEs) in Spain can access a range of tax incentives designed to reduce their tax burden and promote financial stability. From tax base reduction to deductions for bad debts and accelerated depreciation, these advantages can significantly impact an SME’s cash flow and long-term viability. Find out if your business qualifies.
Small and Medium-sized Enterprises (SMEs) classified as Small Business Entities (SBEs) in Spain can access tax incentives designed to ease their tax burden and support business growth. These benefits help enhance liquidity and financial stability, facilitating investment and expansion.
What are the eligibility requirements?
To qualify for these incentives, a company must meet a key criterion:
Annual turnover below €10 million in the preceding tax year.
If a business surpasses this threshold, it may continue applying these tax incentives for up to three more years, provided it met the conditions in the two previous financial years.
Key tax benefits
Tax Base Equalisation Reserve
This allows businesses to reduce their taxable base by up to 10%, capped at €1 million. This creates a financial buffer to offset lower-income years.
Accelerated Depreciation
SMEs can amortise new tangible fixed assets and real estate investments more quickly, reducing their taxable base in the early years of asset ownership.
Bad Debt Deduction
Estimated losses due to customer insolvency are deductible, helping safeguard business liquidity and reducing tax liability.
Double Depreciation Rate
A multiplier of 2 can be applied to the maximum depreciation rate allowed, enabling faster cost recovery on investments.
How is turnover calculated?
Net revenue, excluding VAT, adjusted for refunds, rebates, and discounts.
If the business is part of a corporate group, the total combined turnover of all affiliated entities is considered.
For first-year businesses, turnover is annualised.
Conclusion
These tax incentives provide a valuable opportunity to optimise tax liability and foster sustainable SME growth.
If you require specialist advice on how to apply these incentives to your business, at Valero Asesoría y Gestión SL, we are here to assist you.
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