SPAIN: An Introduction to Tax: Barcelona

The Geopolitical and Domestic Economic Context Shaping the Spanish Tax Landscape

In 2025, Spain adopted several measures to boost its economy, promote fairness and employ technology to streamline processes, in the context of domestic economic growth paired with increasing uncertainty over the global geopolitical scenario.

From a domestic tax perspective, the tax measures in the corporate income tax (CIT), which were challenged by the Constitutional Court in 2024, have been reintroduced with the corrections deemed necessary after the judicial decision (ie, limitation of net operating losses applied and a mandatory reversion of tax impairments on shares), as these measures have a significant impact on the Spanish General Budget. It is expected that the new measures may be scrutinised by the courts in the future.

In fact, many tax measures approved in the last ten years are currently being reviewed by the courts, with future judicial decisions to be issued by the Supreme Court, the Constitutional Court or even the Court of Justice of the European Union, which may redefine Spanish tax policy in the coming years. CIT matters under review include:

• payments on account of CIT;
• the Spanish participation exemption, which is limited to 95%;
• how tax authorities monitor and apply R&D and IT tax credits; and
• how the tax neutrality regime derived from the EU Merger Directive is defined in the law and applied by the Spanish tax authorities.

From a tax controversy perspective, the Spanish Tax Authorities are focusing on transfer pricing adjustments, by thoroughly analysing their functional profiles to ensure the related parties’ compensation aligns with their functions, assets, and risks. It also entails verifying that intra-group financial transactions have the appropriate interest rates based on the type of financial instrument and the credit profile of the debtor, as well as ensuring compliance with regulations regarding the documentation of related-party transactions.

This increase in tax disputes in this area has naturally led to a significant rise in the number of mutual agreement procedures (MAPs) and requests for advance pricing agreements (APAs) to prevent disputes by reaching agreements with the tax authorities. It is expected that in the coming years, transfer pricing will remain one of the most contentious issues between tax authorities and companies.

The approval of the Spanish global minimum tax law, introducing Pillar Two rules in Spain, has represented a significant milestone in the implementation of the OECD’s Pillar Two global minimum tax solution. Spanish legislation follows the outline of the global minimum tax as defined in the EU Pillar Two Directive and the OECD Model Rules.

As a result, Spain has implemented Pillar Two through the approval of three forms of top-up tax: an income inclusion rule (IIR) and a qualified domestic minimum top-up tax (QDMTT) applicable for fiscal years starting on or after 31 December 2023, as well as an undertaxed profits rule (UTPR) generally applicable for fiscal years starting on or after 31 December 2024.

With the implementing regulations already approved in Spain and currently undergoing consultation on the draft order through which the forms related to this obligation will be implemented, the greatest uncertainty on the horizon is the geopolitical instability surrounding this tax figure. This has become particularly evident in light of the recent agreements reached between the United States and the G7, agreements through which OECD Pillar Two taxes will not apply to US-parented groups, as well as the potential reactions to such agreements within the EU and the OECD Inclusive Framework.

Spain is in the process of implementing a mandatory electronic invoicing system, which will significantly alter the invoicing processes for nearly all companies in the country. The transition to e-invoicing aims to combat late payments and promote digitalisation. All invoices shall be submitted compulsorily to a public e-invoicing solution managed by the Spanish Tax Authorities and voluntarily through private e-invoice platforms, enabling real-time monitoring of payment deadlines and invoice statuses.

The e-invoicing requirement will take effect one year after the ministerial order is approved for companies with an annual turnover exceeding EUR8 million, and two years for all other businesses and professionals.

The Spanish government has also introduced changes in the new invoicing software (IS), which is compulsory for taxpayers not using the electronic VAT books system (the “SII system”). Manufacturers and distributors of IS shall adapt to the new IS standards by 29 July 2025, while the obligation to use IS for taxpayers has been delayed until 1 January 2026 for corporate income taxpayers and until 1 July 2026 for other taxpayers.

Uncertainty regarding US-EU trade and commercial relationships is also impacting business decisions due to the eventual impact that any such agreement will have from a customs and tax perspective.

This is leading many Spanish companies to reconsider their customs and supply chain strategies. New tariffs and tax incentives in the United States, aimed at protecting domestic industries and encouraging local production, are already affecting Spanish exports. To mitigate the impact of higher duties and retaliatory tax measures, companies are exploring options such as reviewing product origin, optimising customs valuation structures (eg, first sale for export), and even relocating production closer to end markets to limit customs exposure. As a result, customs considerations are becoming a central element of tax planning for internationally active Spanish businesses.

In parallel, Spain has seen significant developments in customs enforcement and digital transformation. The Spanish Customs Administration is among the most advanced in technological matters in Europe, successfully meeting the deadlines set by the Union Customs Code (UCC) for technological renewal. Over the past year, substantial changes have been implemented in customs systems and procedures, driving progressive digitalisation that includes widespread adoption of electronic customs declarations and enhanced data-sharing capabilities. As a result, Spanish companies are actively adapting their compliance frameworks and technical capacities to align with these evolving digital requirements.

In terms of environmental taxation, Spain is experiencing a growing wave of measures aligned with EU policy objectives and green transition goals, reinforcing its commitment through the rollout and tightening of levies on single-use plastics, fluorinated greenhouse gases and waste. These measures are complemented by EU-wide initiatives such as the Carbon Border Adjustment Mechanism (CBAM) and the new Deforestation Regulation. These instruments require companies to report embedded emissions and verify the sustainable sourcing of key raw materials.

In this context, the global supply chains of Spanish companies are being reshaped not only by geopolitical tensions and logistical pressures but also by structural regulatory changes in both trade and sustainability. As these frameworks consolidate, supply chain configuration and compliance are becoming key pillars of long-term tax and operational strategy for Spanish companies.

In summary, the evolving geopolitical landscape and domestic economic conditions are significantly shaping Spain’s tax framework. The introduction of new tax measures, including the implementation of electronic invoicing and the Global Minimum Tax Law, reflects the government’s commitment to enhancing tax compliance. Overall, these developments present both challenges and opportunities for Spanish businesses in a complex and evolving landscape.