Taxes of an SL That Owns a Project: Profit, Dividends, Rates

An SL (sociedad limitada, a Spanish limited company) that owns a project pays two taxes in a row. First the company pays impuesto sobre sociedades (corporate income tax) on profit: 25% as the general rule, in 2026 23% with turnover below 10 M€ and 19% and 21% with turnover below 1 M€, and 15% for a new company in its first two periods with profit. Then, when money is paid out to the owner, dividend tax arises. Which rate applies depends on turnover and the type of assets, not on the owner's wishes.

First layer: the SL's corporate income tax

The general rate is 25%. For periods starting in 2026, companies with net turnover below 10 M€ in the previous period (empresa de reducida dimensión, art. 101 LIS) pay 23%, and those with turnover below 1 M€ pay on a scale of 19% on the first €50,000 of base and 21% on the rest (disposición transitoria 44 LIS). In 2027 the rate for turnover up to 10 M€ falls to 22%, and in 2028 to 21%. A new company that has started an economic activity pays 15% in the first period with a positive base and the next; the condition does not apply if a related party carried on the activity before or the company belongs to a group (art. 29 LIS).

The trap is in the words entidad patrimonial (asset-holding company). That is what a company is called if more than half its assets are not tied to an economic activity. Letting property counts as an economic activity only if at least one employee on a full-time contract is used for it (art. 5 LIS). If an SL lets flats without an employee, it may turn out to be patrimonial, and the reduced rates of 23%, 19%, 21% and 15% do not apply to it. An SL that buys, renovates and sells usually has an economic activity, but the asesor fiscal (tax adviser) checks the classification.

Second layer: tax when cash is paid out

Dividends to a non-resident are taxed at 19%, while for a Spanish resident they go into the base del ahorro (savings income base) and the rate follows a 19–30% scale (art. 25.1.f TRLIRNR, art. 46 LIRPF). The treaty conditions and the withholding procedure are covered in the article on dividends to a non-resident.

A worked example, not a forecast and not a DNPI project. The SL's profit before tax is €164,000 (as in the article on tax on flipping profit); all net profit is paid to the owner in the year it is earned.

For the resident the scale is applied without a personal allowance or other income. If the money stays in the company for the next project, there is no second layer yet. It arises on payout. Money from the sale of a property tied to the activity is not counted as idle assets in the period of sale and the two following ones (art. 5.2 LIS). If it sits in an account longer, the question of entidad patrimonial arises.

Losses, interest and other differences of an SL

Losses are carried forward to future periods with no time limit, but with a cap: no more than 70% of the base, while up to 1 M€ can always be offset. For new companies the cap does not apply in the first three periods with a positive base (art. 26 LIS). Net financial expenses are deductible up to 30% of operating profit, and up to 1 M€ a year is deductible in any case (art. 16 LIS).

A loan from the owner to the SL is treated as a transaction between related parties: the terms must be at market level (art. 18 LIS). The rate and terms should be written into the agreement, and the evidence of market terms kept.

Companies with turnover below 1 M€ do not pay the tax on economic activity (IAE, Impuesto sobre Actividades Económicas) (art. 82.1.c TRLRHL). The deadlines for an SL's returns are collected in the investor's tax calendar.

When an SL does not fit

An SL complicates a project if you invest in a single apartment, want to take all the profit out quickly or are not ready for bookkeeping: annual accounts, IVA and corporate tax returns, reporting. The table above shows that in this example, with full payout of profit, an SL does not reduce tax compared with holding as an individual. It gives something else: separate accounting for projects, the option to leave money in the company, and several investors in the articles of association. The forms of ownership are compared in the article on buying through an SL or as an individual and in the article on tax when a company sells a property.

Questions for the asesor fiscal: will my SL fall under entidad patrimonial, which corporate tax scale applies to me, how to pay out profit, and how to document the owner's loan so that its terms count as market terms.