Corporate Income Tax is a direct tax levied on the income and profits of companies and other legal entities. It is a concerted tax of autonomous regulation. The Provincial Councils of Alaba, Bizkaia and Gipuzkoa regulate this tax respecting the harmonization principles established in the Economic Agreement.

In the case of Basque legislation, this applies to entities whose tax domicile is in the Basque Country. If the volume of operations of a legal entity exceeds 7 million euros per year, it is also required that more than 25% of its operations are carried out in the Basque Country.

Even if a company has its headquarters outside the Basque Country, it will pay corporation tax in the Basque Country to the provincial entities if 75% or more of the volume of its operations is carried out there.

It is possible for an entity to distribute the result of its liquidation among several tax administrations. This occurs when the taxable event taxed has occurred in more than one territorial area. Taxation will be based on the number of transactions carried out in each territory during the year.

What tax rates should be taken into account?

The reform of the same will entail a reduction of the general rate from 28% to 24% for 2019.

For SMEs and micro-SMEs, it is reduced from 24% to 20%.

The reform is implemented gradually by lowering two points in 2018 and another two in 2019.

The 28% rate is maintained for credit institutions.

The minimum rate is raised from 11 to 17% for large companies and from 13 to 15% for SMEs.

The reform will be fully implemented in 2020.