Selling a company is, for most business owners, the most financially significant decision of their professional lives. It is the result of years of work, risk and sacrifice. And it is precisely for this reason that the tax treatment of the transaction deserves priority attention: taxes on the sale of a company can make a difference of hundreds of thousands, or even millions of euros in the net proceeds the seller ultimately receives. Understanding the tax framework before initiating the process is not a technical detail — it is a prerequisite for making well-informed decisions.

This article explains, in practical terms, how taxation works in a company sale in Spain.

Taxes on selling a company in Spain

The tax treatment of a company sale depends fundamentally on two variables:

  • Who sells (an individual or a legal entity)
  • and what is sold (the shares or equity interests in the company, or the underlying business assets).

These two decisions determine which taxes are triggered, who bears them and when they fall due. There is no single model: effective tax rates can range from 1.25% to 40% or more, depending on how the transaction is structured.

Share sale: the most common structure

When the seller transfers the shares or equity interests in the company, the transaction is known as a share deal. It is the most common structure in the Spanish market, particularly in the middle market, and concentrates the entire tax burden at a single point: the gain obtained by the seller on their shareholding.

If the seller is an individual, that gain is subject to Personal Income Tax (IRPF) as a capital gain integrated into the savings tax base.

If the seller is a company — typically a holding company — the capital gain is subject to Corporate Income Tax (IS), with the possibility of applying the exemption under Article 21 of the Corporate Tax Act, which can reduce the effective tax rate to 1.25%.

From an indirect tax perspective, the sale of shares is generally exempt from VAT and Transfer Tax (ITP). However, there is a relevant anti-avoidance rule: where the transfer grants control of a company whose assets consist of more than 50% of real estate not used in a business activity, the transaction may be subject to ITP as if it were a direct transfer of real property.

Asset sale: different tax implications

In an asset deal, the company sells its assets directly — machinery, customer portfolio, trademarks, real estate — rather than the shares. This structure generates very different tax consequences and, in most cases, is less tax-efficient for the seller.

The capital gain arises at the company level and is subject to Corporate Income Tax at the general rate of 25%.When the individual shareholder subsequently wishes to extract that liquidity, they are taxed again on the dividends received: economic double taxation occurs, which can push the combined tax burden to 40–46% of the gain.

In addition, the sale of individual assets may attract VAT at 21%, unless the assets being transferred as a whole constitute an autonomous economic unit capable of operating independently — the non-taxable supply under Article 7.1 of the VAT Act. Where real estate is involved, regional Transfer Tax (ITP) may apply (between 6% and 10% depending on the autonomous community), as well as the municipal land value increment tax (plusvalía municipal) on urban land.

An asset deal tends to be more attractive to the buyer — who can cherry-pick assets and obtain a new depreciable tax base — which sometimes translates into a higher offered price. For the seller, however, the tax cost is almost always higher. The choice of structure has a direct impact on the final tax bill and must be analysed before the sale process begins.

Taxes on a company sale when the seller is an individual

The most common scenario in middle market transactions is that of the individual shareholder selling their equity interests directly. This is the profile of the family business owner who has built a company over decades and, at a given point, decides to divest.

Capital gain under Personal Income Tax: how it is calculated

The capital gain is determined as the difference between the sale value and the acquisition cost. The sale value is the actual transaction price, from which the costs directly associated with the transaction and borne by the seller are deducted: financial and legal advisory fees, notary fees and, where applicable, the cost of discharging encumbrances. The acquisition cost is the amount originally paid to acquire the shares, increased by the costs and taxes borne at the time of acquisition.

For unlisted equity interests — the standard case in an SME or family business — the regulations establish a minimum transfer value for tax purposes: the higher of the proportional net book value of the shares based on the last closed balance sheet, and the result of capitalising at 20% the average profits of the last three closed financial years. If the transaction price is lower, the tax authorities may challenge the value. The taxpayer can rebut this presumption by submitting a professional valuation that demonstrates the market price.

The resulting gain is integrated into the savings tax base of Personal Income Tax and taxed according to a progressive scale. Since 2025, Law 7/2024 has raised the maximum rate from 28% to 30% for the portion of the gain exceeding €300,000. The bands are as follows:

  • 19% up to €6,000
  • 21% between €6,000 and €50,000
  • 23% between €50,000 and €200,000
  • 27% between €200,000 and €300,000
  • 30% above €300,000

For a transaction of €5 million with an acquisition cost of €500,000, the Personal Income Tax liability amounts to approximately €1.33 million.

Where the transaction includes deferred consideration with a final maturity of more than one year, the taxpayer may elect to recognise the gain proportionally as each instalment falls due — the instalment sale rule under Article 14.2.d of the Personal Income Tax Act. This option can soften the effective tax rate by avoiding the concentration of all income in a single tax year. In the case of earn-outs — variable price components tied to future business performance — the same recognition timing applies as instalments become due, but the contractual structure and calculation mechanism are critical to avoid fiscal uncertainty.

Exemptions and reliefs applicable to company sales

Spanish tax law provides several mechanisms that can reduce the tax burden for individual sellers, although none operates automatically or universally.

For taxpayers aged 65 or over, Article 38.3 of the Personal Income Tax Act allows the capital gain arising from the sale of any asset — including business equity interests — to be excluded from taxation, provided the proceeds are reinvested in a guaranteed life annuity within six months. The maximum lifetime cap is €240,000. This benefit is relevant in retirement contexts but is insufficient for transactions of significant scale.

For sellers who previously acquired shares in newly incorporated companies that gave rise to a tax deduction, Article 38.2 of the Personal Income Tax Act allows the gain to be exempt provided the proceeds are reinvested in shares of another qualifying entity under Article 68.1 — an unlisted limited company, with genuine economic activity, recently incorporated, and with a maximum shareholding of 40%. The reinvestment period is one year and the exemption is proportional to the amount reinvested.

In the context of family businesses, Article 20.6 of the Inheritance and Gift Tax Act allows a reduction of 95% (up to 99% in regions such as Andalusia or Madrid) of the value of the shareholding where the transfer is effected by way of an inter vivos gift. For this to apply, the shares must be exempt from Wealth Tax — which requires a minimum individual shareholding of 5% (or 20% for a family group), genuine economic activity, and that the donor receives more than 50% of their net employment and business income from the directorial functions performed in the company.

In addition, the donor must step down from their management role following the transfer. If all requirements are met, the donor is also not subject to Personal Income Tax on the capital gain — Article 33.3.c of the Personal Income Tax Act. The national holding period requirement is ten years, though several autonomous communities have reduced this to five.

Tax planning carried out well in advance of the transaction, with sufficient lead time, can significantly reduce the overall tax burden.

How to optimise taxation before selling a company

Tax planning does not begin on the day the decision to sell is made — it begins years earlier. Structures that legitimately reduce the tax burden require time: corporate reorganisations have minimum holding periods, the creation of a holding company under the tax neutrality regime of Chapter VII of Title VII of the Corporate Tax Act needs time to consolidate, and establishing the valid economic rationale behind a restructuring requires a narrative that is consistent with the operational reality of the business.

Pre-transaction structuring to reduce the tax burden

Corporate reorganisations carried out prior to the sale — demergers, segregations, share exchanges, asset contributions — allow the perimeter of what is being transferred to be refined: ringfencing non-operational assets (real estate, financial portfolios, non-core business lines), creating a clean sellable perimeter and facilitating a more straightforward share deal for the buyer. These transactions are structured under the tax neutrality regime, which defers taxation until the moment of the actual sale to a third party, provided that valid economic motives exist to justify the reorganisation.

The creation or use of holding structures is, in this context, one of the most frequently recommended strategies.The timing of the transaction also has fiscal implications: Law 7/2024 raised the maximum marginal rate of Personal Income Tax to 30% from 2025 onwards, which further reinforces the value of planning the structure before the divestment is executed.

Tax due diligence: identifying contingencies before the buyer does

Tax due diligence is the process by which the buyer reviews the company's tax position prior to closing. Its purpose is to identify contingencies that could lead to price adjustments, additional warranties or even the breakdown of negotiations.

The review covers at minimum the four non-statute-barred financial years. The most frequent contingencies identified in Spanish M&A transactions are related-party transactions without adequate documentation — a priority area for the Spanish Tax Agency (AEAT) in 2025 and 2026 — personal expenses of shareholders charged as business costs, errors in withholding tax applied, VAT pro-rata issues, and improperly offset tax loss carryforwards. Where the company holds real estate, risks related to property valuation, the municipal land value increment tax and potential 3% withholding obligations if sellers are non-residents are also relevant.

The best defence in a tax due diligence is a well-ordered company. Identifying and resolving contingencies before going to market not only reduces fiscal risk but also strengthens the seller's negotiating position.

The role of the financial adviser in a company sale

The tax treatment of a company sale cannot be addressed in isolation. Taxation is intimately connected with valuation, negotiation and transaction structure. Treating these as separate variables is one of the most common mistakes made by business owners who approach the process without adequate advisory support.

Taxation and valuation: two variables that influence each other

The tax structure directly affects the net proceeds received by the seller. A share deal with the benefit of the Article 21 exemption may justify accepting a lower headline price than an asset deal if the net after-tax outcome is superior. The buyer also has tax preferences that shape the negotiation: trade buyers typically prefer share deals for their simplicity, while private equity funds value the ability to obtain a new depreciable tax base.

Business valuation and tax planning must be designed in a coordinated manner from the outset of the process. An adviser who focuses solely on valuation without considering tax structure, or who focuses solely on tax without understanding M&A market dynamics, is not giving the seller all the information needed to make the best decision.

Integrated tax planning throughout the sale process

Coordination between the financial adviser and the tax adviser is one of the factors that most significantly impacts the net outcome of a transaction. The optimal sequence is always the same: plan first, execute second. The most costly mistakes occur when taxation is only analysed at closing, when there is no longer any room to manoeuvre.

Common mistakes arising from insufficient advance planning include: not having established the holding company with the minimum holding period required for the Article 21 exemption, not having adequately documented the economic rationale for a prior restructuring, or not having anticipated the impact of the Exit Tax if the seller was considering changing their tax residency before completing the transaction.

Spain applies an Exit Tax to taxpayers who have been resident in Spain for at least 10 of the last 15 years and hold equity interests with a value exceeding €4 million — or a 25% stake in an entity whose value exceeds €1 million. A change of residence to an EU or EEA country with an information exchange agreement allows payment to be deferred, but does not eliminate the liability.

How Maraz Corporate Finance supports the company sale process

At Maraz Corporate Finance we understand that every transaction is unique and that the business owner who decides to sell their company deserves rigorous, close and honest advisory support from the very first moment.

Our approach integrates the tax dimension from the earliest stages: analysing the optimal transaction structure, identifying contingencies before going to market, preparing the process to maximise value and minimise risk, and coordinating with the seller's tax advisers to ensure that every strategic decision takes into account its tax implications.

We accompany the business owner from valuation through to closing: structuring the transaction, preparing the information memorandum, identifying and approaching strategic buyers, coordinating due diligence and negotiating the sale and purchase agreement. All with the confidentiality, dedication and proximity that a transaction of this nature demands.

If you are considering selling your business and want to understand which structure is most efficient in your specific circumstances, contact our team.

 

Javier de Rojas Roca de Togores

Partner - Maraz Corporate Finance

 

FAQs Taxes on Selling a Company in Spain

What taxes are paid when selling a company in Spain?

It depends on who sells and how. If the seller is an individual transferring equity interests, they are subject to Personal Income Tax on the capital gain, at rates between 19% and 30%. If the seller is a company, the capital gain is subject to Corporate Income Tax at 25%, although with the Article 21 exemption the effective tax rate can be reduced to 1.25%.

What is the difference between selling shares and selling assets from a tax perspective?

In a share sale, the individual seller is taxed only once under Personal Income Tax. In an asset sale, the company pays Corporate Income Tax on the gain and the shareholder is then taxed again when extracting funds as dividends, resulting in economic double taxation that can push the combined tax burden to 40–46%. In addition, an asset sale may trigger VAT, Transfer Tax and the municipal land value increment tax.

How is the sale of a company taxed under Personal Income Tax?

The capital gain — the difference between the sale value and the acquisition cost — is integrated into the savings tax base and taxed at 19% on the first €6,000, 21% between €6,000 and €50,000, 23% between €50,000 and €200,000, 27% between €200,000 and €300,000, and 30% above €300,000 (scale in force from 2025).

What taxes does a company pay when selling a business?

The capital gain is taxed under Corporate Income Tax at the general rate of 25%, although SMEs with turnover below €10 million are taxed at 24% in 2025. If the requirements of Article 21 of the Corporate Tax Act are met — minimum 5% shareholding and at least one year of continuous holding — 95% of the gain is exempt, resulting in an effective tax rate of 1.25%.

Can the tax burden on a company sale be reduced?

Yes, with advance planning. The main tools are: the interposition of a holding company to benefit from the Article 21 exemption, the use of deferred consideration to spread the tax liability over time, exemptions for reinvestment in a life annuity for sellers aged 65 or over, and the family business regime for gratuitous transfers. All of these require time and adequate documentation: they are not solutions that can be applied at the moment of closing.