Is your company small?
If your company is considered small, you can enjoy various tax incentives that will allow you to defer your taxation in corporate tax. Remember with us the requirements you must meet for this.
In this article we will see the tax benefits and the keys to the success of small companies.
Scheme for small enterprises
Incentives for small businesses
Accelerated amortisation.
If your company is considered a small entity (that is, if it is an SME), by quantifying the Corporate Tax (IS) you can enjoy some incentives that allow you to amortise your assets more quickly:
Freedom of amortisation.
First of all, you can opt for the incentive of the freedom of amortisation, with which you can freely amortise the new assets you acquire, up to 120,000 euros for each worker in which the average staff increases.
Double amortisation.
You can also opt for double amortisation, which allows you to amortise new assets according to the maximum coefficient multiplied by 2.
Leasing.
On the other hand, in the case of assets acquired through leasing, in addition to interest, your company can deduct each year the least between the recovery of the cost of the leasing and the amount of the amortisation that would result from applying three times the maximum coefficient.
Other advantages for small businesses
Likewise, because it is small, your company can also enjoy the following incentives:
Generic deterioration of customers.
It can be accounted for and deducted as an expense for impairment up to 1% of the balance of debtors that exists at the end of the year.
Levelling reserve.
It may apply a reduction of 10% of the positive tax base for the year (with a limit of one million euros).
Tax rate for small companies from 2025
Corporate tax percentage in Spain: Rates and news in 2025
Corporate tax is a tax on income received by companies and other entities in Spain....
Small Dimension Company Concept
What is a small company?
Entities classified as small companies play a key role in the country’s economic fabric.
This section analyses its definition, qualification criteria and the circumstances that allow maintaining this status.
Definition according to the Corporate Tax Law
According to the regulations in force in the Corporate Tax Law, a small company is considered one whose net turnover does not exceed 10 million euros in the previous year.
This classification allows certain tax benefits to be applied, offering a favourable framework for their development.
The turnover includes all income from the economic activities carried out by the entity, and the total must be considered in case the company is part of a corporate group.
Criteria for your qualification
To be classified as a small company, various criteria must be met:
The net amount of turnover must be less than 10 million euros.
The calculation must be made annually and takes into account all the economic activities of the company.
If the entity belongs to a group, the group’s consolidated turnover will be taken into account for the rating.
It is important to note that an increase in income may not mean an immediate loss of status, since there is a three-year margin in which profits can continue to be applied, provided that the company has maintained its size in two previous years.
Special situations and maintenance of status
Companies that exceed the threshold of 10 million euros in a given period, but meet certain requirements, will be able to continue to enjoy tax incentives for an additional time.
This is especially relevant in cases of business restructuring where the increase in turnover is justified.
General requirements include:
The exceeding of the limit must be documented and justified.
Business restructuring must be covered by a special tax regime.
In this way, companies can continue to benefit from a favourable fiscal environment, which contributes to their sustainability and growth in the market.
Understanding and properly managing these circumstances is essential to maintain the status of a small company in the long term.
We are going to delve into the requirements of a small company.
Tax Benefits for Small Businesses
Small companies enjoy various tax benefits that allow them to manage their tax burden more efficiently. These incentives are key to boosting its development and ensuring a better position in the market.
Freedom of Amortisation for Investments
The freedom of amortisation is a significant benefit that allows these companies to establish their own amortisation methods for fixed assets.
Investments that generate employment
To benefit from this deduction, a company must increase its average workforce by 10% within 24 months of the acquisition of the assets to be amortised. This increase not only favours the company’s finances, but also contributes to the generation of employment.
Investments of low value
Entities can amortise assets whose unit value does not exceed 300 euros, with a maximum limit of 25,000 euros per tax period. This makes it easier for small investments to be more effective and deductible.
Accelerated depreciation
Accelerated amortization makes it easier for companies to double the maximum linear amortisation coefficient established in the official tables.
New tangible fixed assets
This benefit applies to the newly acquired elements of tangible fixed assets, thus favouring companies that make investments in durable goods.
Elements of intangible fixed assets
With regard to the elements of intangible fixed assets, the regulations allow those whose useful life cannot be reliably determined to be amortised at 150% of the amount resulting from the application of the corresponding coefficient. This aspect is especially relevant for companies in the technology sector.
Tax Base Levelling Reserve
The levelling reserve allows these businesses to reduce their tax base by 10%, up to a maximum limit of 1 million euros per year.
Operation and benefits
The reservation is considered unavailable until it is decided to add it to the tax base in future tax periods. This measure allows companies to capitalise on critical moments, allocating part of their profits to these reserves, which can be beneficial in the long term.
Application in successive tax periods
Applying the reserve in successive tax periods can help balance the tax burden of years with higher incomes, thus allowing better financial planning.
Deduction for Losses due to Credit Imparisement
Companies can deduct losses caused by credit impairment in their accounts, up to a limit of 1% on debtors at the end of the accounting year.
Possible debtor insolvencies
This deduction provides protection of the current asset in the company’s accounting, essential to maintain adequate financial health.
Calculation according to the authorised percentage
The calculation of the deduction is based on the percentage allowed, which provides companies with a tool to mitigate the impact of potential non-payments.
Financial Lease as Deductible Expense
Assets acquired under the financial leasing regime may be considered deductible expenses in the part corresponding to the recovery of the cost of depreciable assets.
Conditions of the special scheme
This regime has certain conditions that must be met, which offers companies the possibility of optimising their tax return through adequate management.
Cash flow optimisation
The deduction of expenses derived from this type of lease allows a more efficient management of cash flow, crucial for the daily operation of any company.
Requirements to be a small company
10 million rule
Turnover
For your company to be considered an SME (i.e., small in size) and to be able to enjoy these tax incentives in your IS, it is necessary – among other requirements – that your turnover (or that of your group if you belong to one) has been less than ten million euros in the previous year.
Companies that are considered patrimonial entities – those in which more than half of the assets are made up of securities or are not affected by an economic activity – cannot apply the incentives of SMEs.
This is so regardless of what your turnover is.
Calculation of a company’s turnover
To correctly calculate the turnover you must do the following operations:
Concepts that add up
Calculate the sales of goods or services habitual in the activity, not including the VAT passed on, and add the subsidies that have been obtained based on the product units sold by the company.
Concepts that subtract
Count with negative sign the sales returns, as well as the rappels and discounts granted.
Neither the sales of fixed assets used in the activity, nor the subsidies to make investments, nor the financial income should be counted (unless among the usual activities of the company is the provision of financial services).
Turnover of a Group of companies
When determining what your turnover is (and seeing if it is less than ten million euros or not), if your company is part of a group, this figure will refer to that of all the entities of the group (considering the eliminations and incorporations established by the accounting regulations).
For these purposes:
Commercial group
In the first place, it must take into account the turnover of those companies that are part of the same commercial group, regardless of whether or not that group is obliged to prepare consolidated annual accounts.
Family group
If your group or your company is controlled by a natural person member who – alone or together with his spouse or relatives up to the second degree (parents, grandparents, siblings, children and grandchildren) – controls other companies, you must also calculate the turnover of those companies.
Individual activity
Finally, if the natural person member who holds the control develops an economic activity on his own account, he must also calculate the turnover that said partner obtains for his activity.
3 rule
Special rule
Remember that, even if in one year the turnover of your company exceeds ten million and, in principle, it is no longer small in the following tax period, it is possible that you can still continue to enjoy the incentives of SMEs for three more years.
Specifically, this will happen when in that year and in the previous two years it has met the conditions to be considered an SME.
Example 1 of small company
With the following data, even if in 2024 its turnover has exceeded ten million, your company will be able to continue applying the small incentives in the IS of the years 2025, 2026 and 2027 (data in millions of euros):
| Concept | 2021 | 2022 | 2023 | 2024 | 2025 |
| Turnover | 5 | 6 | 9 | 13 | 14 |
| 10 million rule? | – | Sí | Sí | Sí | No (1) |
| Incentives? | – | Sí | Sí | Sí | Sí (1) |
Given that in 2024 the turnover exceeds ten million, in principle in 2025 it will cease to be an SME.
However, as in 2022 and 2023 you met the requirements to be an SME, you can continue to enjoy the incentives in 2025, 2026 and 2027.
Example 2 of small company
In example 1, if the turnover of 2022 had been 12 million euros, in 2025 the three-year rule would not apply and the company would not be able to enjoy SME incentives:
| Concept | 2021 | 2022 | 2023 | 2024 | 2025 |
| Turnover | 5 | 12 | 9 | 13 | 14 |
| 10 millones rule? | – | Sí | No | Sí | No (2) |
| Incentives? | – | Sí | (1) | Sí | No (2) |
In 2023, SME incentives could be applied if in 2020 and 2021 the company has met the requirements to be considered small.
Since in 2024 the turnover exceeds ten million, in 2025 the company is not an SME.
The three-year rule does not apply (in 2022 the turnover exceeds ten million).
Group: training and growth
Dubious assumption.
In the event that in a financial year your company is incorporated into a group of companies or in the event that, already being part of one, another company is added to it, doubts may arise regarding how to apply the aforementioned rules.
See below an example of how to act in these cases.
Example of group of companies
At the beginning of 2024, company A acquired 100% of B’s shares, constituting a group together with it. The turnover of companies A and B has been as follows (in millions of euros):
| Concept | 2021 | 2022 | 2023 | 2024 | 2025 |
| Company A | 11 | 12 | 12 | 14 | 14 |
| Company B | 1 | 2 | 2 | 3 | 4 |
| Group (consolidated figure) | – | – | – | 17 | 18 |
Solution
With this data, company A has no right to apply the SME regime either in 2024 or in 2025 (its individual and group turnover has always been more than ten million).
However, in the case of company B:
- In 2024 it can no longer be considered small according to the ten million rule, since in 2023 the group’s turnover exceeds that amount.
- However, given that in 2023 (which is the year in which the turnover exceeds ten million) and in 2022 and 2021 the company met the requirements to be considered an SME, it will be able to benefit from the three-year rule and also enjoy SME incentives in 2024, 2025 and 2026.
According to an alternative criterion, in this example it should be considered that ten million have been exceeded in 2024 (in 2023 company B should only take into account its individual turnover of two million).
This criterion would allow company B to apply SME incentives until 2027.
Even if your company’s turnover exceeds ten million euros, remember that in certain cases you can continue to apply the incentives of small companies for three more years.
Implications of Small Business Status
The status of a small company influences various aspects of operational and financial planning. The implications are significant, affecting both investment strategies and financing possibilities.
Impact on investment and growth strategies
Companies classified as small in size tend to have greater flexibility to make strategic investments. Thanks to their tax benefits, they can reinvest their savings in new technologies, staff training and market expansion. This potential for reinvestment translates into:
- Facilitating innovation: The reduction of the tax burden allows more resources to be allocated to research and development, promoting the innovation of products and services.
- Sustained growth: Companies can plan their long-term growth, based on the incentives they receive, which favours the hiring of new employees and the creation of added value.
Financing possibilities and access to capital
The status of a small company not only affects the tax burden, but also affects the perception that investors have about the financial strength of the company. Entities that maintain this status usually enjoy a favourable image before banks and investors, which translates into:
- Preferential conditions: Access to credit and financing is simpler, with more advantageous conditions, which helps to secure resources for investment projects.
- Investor interest: Companies that benefit from tax incentives more easily attract private capital, as investors see reduced growth potential in other forms of business.
Loss of status and its tax consequences
Once a company exceeds the established turnover threshold, its classification changes to large, which brings with it a series of tax disadvantages. The most relevant consequences include:
- Elimination of tax benefits: The loss of status causes the fall of access to deductions, which can generate a greater tax burden and limit the possibilities of reinvestment.
- Impact on financial planning: Management and financial projections must be readjusted, which can delay ongoing projects and affect market competitiveness.
Therefore, maintaining the status of a small company is key to ensuring a favourable tax landscape and promoting a solid and sustainable growth environment.
Frequently Asked Questions about Small Businesses
Small companies usually generate various concerns related to their operation and benefits. Here are some frequently asked questions along with their answers.
Differences between small companies and other companies
The main differences between small companies and large companies lie in their financial dimensions and the tax benefits they can access. The most notable features are:
- Turnover: Small companies have a net turnover of less than 10 million euros, while large companies exceed this threshold.
- Tax Benefits: Small entities enjoy certain tax incentives that are not available to large companies. This includes measures such as freedom of amortisation and accelerated amortisation.
- Administrative Flexibility: Smaller companies tend to have a more agile organisational structure, which allows them to adapt quickly to market changes.
How to properly apply tax benefits
To ensure that tax benefits are properly applied, companies must:
- Precise Documentation: Maintain adequate records that justify the application of deductions, credits and amortisation.
- Tax Advice: Have the support of a tax advisor who knows in depth the requirements and benefits that small companies can apply.
- Knowledge of Regulatory Changes: Be informed about updates in tax legislation that may affect the available incentives.
Effects of changes in turnover
Changes in turnover can have significant implications for small companies. Some of the effects include:
- Loss of Status: If a company exceeds 10 million euros, it loses its status of small size, which may result in the loss of certain tax benefits.
- Temporary Benefits: Despite exceeding this limit, companies can enjoy tax benefits for three additional years if they maintained the status in previous years.
- Tax Planning: It is essential to carry out adequate tax planning in the face of changes in income, to evaluate whether adjustments should be made in the business strategy.
Patrick Gordinne Perez
Founder of Asesoria Orihuela Costa and graduated in economics from the University of Alicante
