Almost half of Spanish multinationals pay less than 15% corporate tax

by Deborah Cater
Corporate tax in Spain

MADRID – In the midst of the debate between the social-democratic PSOE and the left-wing coalition partner Unidas Podemos about imposing a minimum rate of 15% corporate tax, the tax authorities released some revealing data.

46% of the large Spanish multinational companies – those with an activity of more than €750million – paid less than 15% in respect of their worldwide profits. 

The statistics published this week by the tax authorities correspond to the year 2018. They indicate the effective corporate tax rate large Spanish companies bear is on average 18.3%. That is not only in Spain, but in all countries where they operate. That is, above the minimum 15% the government wants to impose. However, many others lower the average significantly. In fact, for a total of 20 multinationals, with 2,461 registered subsidiaries, the tax burden is barely 1.88%. 

A quarter pay more than 25% tax

It should be borne in mind that the data from the new model 231 of the country declaration of the 122 multinationals exceeding the turnover of 750 million, includes the payments of the subsidiaries abroad. 

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According to the tax authorities, about 26% of these companies pay more than 25% tax on their worldwide profits. That percentage is higher than the nominal Spanish rate. But many others pay considerably less, thereby lowering the average tax percentage paid.

31 companies pay a positive effective rate of 32.31%. Others, meanwhile, pay as little as 1.88%. The gap shows, among other things, the problem of large multinationals taxation is not so much the size, but the practices to lower that tax bill. Many companies pay tax where the tax burden is lower. 

Multinationals pay tax where the burden is lower

According to data from the tax authorities, national multinationals register 53% of their global sales in Spain. However, only 42% of their profits are here and 39% of the tax they pay is in Spain. On the contrary, the share of worldwide sales by subsidiaries in America only reaches 22% percent, but they declare 30% of world profits and pay 33% of their taxes there, according to information from Hacienda. 

The data gives an idea of ​​the number of companies affected by the measure to be included in the next general state budget (PGE).

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