What type of taxes should a company pay?

[jrineakter]

Having a good idea is the basis of any new business, then comes management and the best thing is to be up to date with everything that may affect your business. For example, what kind of taxes do you have to pay?

Before answering, it should be noted that taxes will depend on the size of your company. A distinction must be made between micro-enterprises (with a maximum of 10 employees), small companies (between 11 and 49), medium-sized companies (between 50 and 250) and large companies (with more than 250 employees).

All companies have a common tax: VAT , which operates in the same way regardless of the size of the entity. But there are three other taxes that do depend on how many employees the company has: corporate tax, regional and local taxes and social security contributions. Below, we address each of them separately.

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VAT
The fact that VAT is common to all economic activities, including the self-employed, does not mean that it is the same for everyone. In fact, there are three different types:

Super-reduced VAT of 4% , applicable to basic necessities, books or medicines.
Reduced VAT of 10% for food italy number data products and goods for agricultural, forestry or livestock use; medicines for veterinary use, water, pharmaceutical products and the purchase and sale of housing and transport.
VAT of 21% , which is applied to the rest of the products and services that cannot be included in the two previous cases.
Corporate Tax
The general corporate tax rate is 25% and has been in force since 1 January 2016. It should be noted that it varies depending on the reduced rates, especially if we consider the cases of entrepreneurs (companies with less than two years of existence), cooperatives, SMEs and micro-enterprises.

In fact, since 2015 there have been two reduced rates of 15% for entrepreneurs , since the preferential rate applicable to this type of company is set at 10 points less than the general rate for two years. In this specific case, holding companies are excluded.

Regional and local taxes
In Spain, regional and local taxes vary frequently.

For example, the Basque Country and Navarre are the autonomous regions in which companies allocate a higher percentage of their gross profit to taxes. SMEs pay more than half of what they earn in taxes (between 50.31% and 50.97%), while large companies pay taxes on more than 63% of their gross profit.

The opposite extreme would be that of Aragon and Castilla-La Mancha , where SMEs pay 49.5% in taxes and large companies 61.5%.

Although the disparity may seem minimal, those small digits can complicate the economics of a company, especially a recently founded one.

Social Security contributions
More than three quarters of all corporate taxes are paid in social security contributions . For SMEs, these taxes represent 78% and for large companies, 92%.

The main consequence is that corporate tax is reduced compared to the total amount that a company has to pay. In the case of SMEs, this tax represents 7%; while in the case of large companies it rises to 16%.

Municipal rates are even lower: 0.83% for SMEs and 5.05% for large companies.

To keep all taxes under control when billing your company, the ideal is to have software that allows you to have everything in one place. For example, with Holded you can automate the calculation of taxes on each of your invoices and check the status of your accounts whenever you want.