Tax friendly locations in Spain

Before proceeding please remember the following: I am not a tax advisor, my knowledge is probably higher when it comes to engineering and informatics. Disclaimer done. I present my findings about financial optimisation in Spain, alongside the sun there are some locations taxed lesser than average European regions. This is of much importance at the beginning of any business where most expenses are salaries, resources are limited and money is short.

Basque Country

First, one region that is better than the average in the peninsula and has a well built industry and entrepreneurial ecosystem. Also has good connections to the rest of Europe by flight. The following numbers are for the Biscay province:

• 20% taxes on business profits for small sized companies.
• Personal income 35% of it is free of charge and many relocation deductions for those moving from anywhere else in Spain or other country.
• Income from assets abroad are tax free.
• Also they have many deductions for research and development R&D expenses.

This autonomous comunity (state) and Navarra are the only ones where taxes are collected by a different tax authority than the rest of Spain. Also there are some differences between Bilscay, Gipuzkoa and Alava. Which are the 3 provinces within the Basque Country.

Melilla and Ceuta

Spanish territory in mainland Africa. Ceuta is much closer to the peninsula and Melilla has flight connections via Malaga and Madrid.

• 60% discount on the standard business profits tax rate, meaning 10% for business profits.
• 60% discount on the individual's income rate, meaning around 18,8% for a high earner, top.

This combination is better for companies starting off, when salaries are the top expense for the company. Important note for Spaniards, there is a peculiarity to this location, all profits generated from the city have those special taxes, while profits generated in the peninsula have the same standard tax rate. After three years living there the income generated in the peninsula has the same discounts. Great location for remote workers, from Spain or foreigners.

Canary Islands

4% taxes for businesses profits, therefore one of the most attractive destinations in the whole Europe. There are requirements such as job creation on the island, with a minimum of employees depending on each case, so it is not just an address and it requires real presence and operations.

On top of this outstanding companies taxes there is one island of the archipelago called La Palma, here there is a 60% discount on personal income taxes

In Ceuta, Melilla and Canary Islands, the taxes are handled by the same State authority. Those low taxes on Canary islands, Melilla and Ceuta are to promote the wealth generation in these regions which need to catch up with the European median income. Same time they are trying to diversify their economies to other sectors.

National startups law

At the country level, there are some new laws making the investment in startups easier. Now with the new startups law, up to 50k in stock options given per year are free of taxes. Tax deductions for the investors putting money in accredited startups, 50% for the amount invested up to 100k EUR for founding partners or business angels, the startup needs a certification, after an evaluation of the company. Requirements are for example years of existence, scalable products, background or style of company incorporation.

While living in Switzerland I learnt how much tax competitiveness attracts businesses and high skilled employment , at the same time I want to note that the country recently voted to accept 15% as the minimum tax for business profits in all cantons.

Endly, any reasonable person will tell you that right % of taxes depends on the relation between how much money is given to the State and how much is received back in education, healthcare, infrastructure etc.