Tax Deductions for SMEs in Corporate Tax Benefits in Corporate Tax for SMEs with Pension Plans
SMEs can reduce their tax burden by making contributions to occupational pension plans. This not only benefits employees’ savings but also optimises corporate taxation, with additional advantages through the new Simplified Occupational Pension Plans (PPES).
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:
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Reduction of the taxable base: Contributions to occupational pension plans are deducted from the Corporate Tax.
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10% deduction on the total tax liability: For contributions made to employees earning less than €27,000 annually.
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Savings on Social Security contributions.
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Incentives to attract and retain talent.
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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:
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Deduct up to an additional €8,500 in contributions to occupational pension plans.
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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
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The 10% deduction applies to employees earning less than €27,000 annually.
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For higher salaries, the deduction is proportional.
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Applicable to tax periods starting from 2 July 2022.
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