Corporate Tax rate reduction for Microenterprises and SMEs.

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One of the most significant tax measures introduced by Law 7/2024, effective from January 1, 2025, is the implementation of a progressive and decreasing tax rate on Corporate Income Tax (IS) for smaller entities.

The objective is clear: to reduce the tax burden on lower-turnover companies and enhance their capacity for reinvestment and growth, setting a distinct path from the general rate of 25%.

I. Tax Rates for Micro-Companies (Turnover < €1 Million €)

Entities with a Net Amount of Turnover (INCN) lower than 1 million euros benefit from a progressive structure by tax base brackets, with a reduction that will be gradually applied until 2027.

This change represents a noticeable decrease compared to the single rate of 23 % these entities applied in previous years, especially incentivizing initial, low-profit activity.

II. Tax Rates for Small and Medium-sized Enterprises (SMEs) (INCN between €1M and €10M.

Although they do not apply the bracket-based tax, Small and Medium-sized Enterprises (SMEs) with a turnover between €1 and €10 million will also see a progressive decrease in their tax rate, easing the burden of the general 25 % rate.

⚠️ Important Considerations: Key Limitations

It is crucial to note that these reductions will not apply to:

1. Holding Companies: Entities whose assets are mostly comprised of securities or are not attached to economic activities will continue to be taxed at the general rate of 25 %.

Newly Created Entities (Startups): They maintain their super-reduced rate of 15 % during the first tax period with a positive base and the subsequent one.

By C.Fabri