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1.Regulatory Framework<\/strong><\/p>\n The special regime for small-sized entities (“ERD”), set out in Articles 101 to 106 of Law 27\/2014, of November 27, on Corporate Income Tax (“LIS”), is one of the main tax-support tools available to small and medium-sized Spanish businesses. It’s designed to encourage capitalization, productive investment, and job retention among companies whose economic size \u2014 measured by net turnover \u2014 stays below certain thresholds.<\/p>\n Beyond the incentives themselves, the regime also ties into the special tax rate under Article 29 LIS, the capitalization reserve under Article 25 LIS, and the installment payment rules under Article 40 LIS. In short, this isn’t a menu of standalone perks \u2014 it needs to be reviewed as a whole at every fiscal year-end.<\/p>\n 2.What Tax Benefits Can an SME Under the ERD Regime Claim?<\/strong><\/p>\n Article 101 LIS sets the scope of the regime: it applies whenever net turnover for the immediately preceding tax period comes in under \u20ac10 million. Once that’s met \u2014 and provided the company doesn’t qualify as a “patrimonial” (asset-holding) entity \u2014 it can access:<\/p>\n The ERD tax rate itself is mid-phase-down: 24% in 2025, 23% in 2026, 22% in 2027, and 20% from 2028 onward. Don’t confuse this with the regime for “micro-businesses” (turnover under \u20ac1 million), which are taxed on a different scale (19%\/21% in 2026), or with the 15% rate for newly created companies.<\/p>\n 3.The Grace Period: Staying an ERD Even After Crossing \u20ac10 Million<\/strong><\/p>\n One of the most important \u2014 and often overlooked \u2014 features of the regime is the “extension” or grace period built into Article 101 LIS itself. Crossing the \u20ac10 million turnover threshold doesn’t mean automatically losing ERD status.<\/p>\n Specifically, a company keeps its ERD status for the three tax periods right after the one in which it crosses the threshold, provided:<\/p>\n In practice, a growing company that pushes past \u20ac10 million doesn’t lose its ERD tax perks overnight \u2014 it gets an extra three-year window to keep using them, which matters a lot when planning investments, leveling and capitalization reserves, and the applicable tax rate.<\/p>\n This extension also applies when the threshold is crossed because of a restructuring under the special regime of Chapter VII, Title VII LIS, provided the entities involved met the ERD requirements both in the year of the transaction and the two preceding tax periods.<\/p>\n We recommend that any company nearing the \u20ac10 million mark document, year by year, its compliance with these conditions, so it can prove its right to keep the regime during the extension period if challenged in an audit.<\/p>\n 4.The Risk Posed by Corporate Groups and Structures with Common Shareholders<\/strong><\/p>\n The \u20ac10 million threshold is never assessed looking at just one company in isolation. The rules require combining turnover in at least two scenarios that create real risk of misapplying the regime:<\/p>\n Commercial groups<\/strong> (Art. 42 of the Commercial Code): when several entities form a group in the commercial-law sense \u2014 typically through control, dominance, or shared decision-making \u2014 turnover is calculated on a combined basis across the whole group. This applies even if the group isn’t required to file consolidated accounts, which is one of the most common sources of error in practice.<\/p>\n Family structures and common shareholders<\/strong> (Art. 101.2 LIS): turnover is also combined when the same individual \u2014 alone or together with relatives up to the second degree (spouse, parents\/grandparents, children\/grandchildren, or siblings) \u2014 holds majority control in several companies carrying out the same, a complementary, or a same-sector activity.<\/p>\n The practical risk is obvious: an individual or family group might hold majority stakes in several operating companies \u2014 directly or through holding companies \u2014 each with turnover well under \u20ac10 million yet still lose ERD status across the board once the turnover of all related entities (linked by family ties or control) is combined and crosses the threshold.<\/p>\n This group or family-linkage analysis must happen before applying any ERD incentive \u2014 looking not just at ownership percentages, but also family relationships among shareholders and whether there’s shared decision-making across holding or operating companies.<\/p>\n Scenarios vary widely: two holding companies controlled by siblings, cousins, or spouses can count as a group here when combined stakes held by relatives up to the second degree add up to majority control across both corporate chains \u2014 even without a formal common parent company.<\/p>\n Conversely, no meaningful family relationship among each holding’s controlling shareholders, or uncoordinated minority stakes, can rule out aggregation \u2014 even in similar-looking structures. The difference usually comes down to specifics of the shareholder structure \u2014 who holds majority control, and what family relationship exists among shareholders \u2014 so every family structure needs individual review.<\/p>\n 5.Conclusions and Recommendations<\/strong><\/p>\n Despite the gradual narrowing of its preferential tax rate, the ERD regime remains one of the most significant tax incentives for Spanish SMEs \u2014 both through its depreciation and reserve incentives, and through the option to keep the regime for three extra years after crossing the turnover threshold.<\/p>\n We recommend that companies and family groups under this regime:<\/p>\n As tax authorities pay closer attention to group structures and to correctly defining the tax perimeter in family-business settings, periodically reviewing these issues is no longer a mere formality \u2014 it’s a core part of managing tax risk. At addwil<\/strong>l, our team of tax specialists would be glad to advise you on these matters.<\/p>\n Author:<\/p>\n Albert Folguera<\/strong> 1.Regulatory Framework The special regime for small-sized entities (“ERD”), set out in Articles 101 to 106 of Law 27\/2014, of November 27, on […]<\/p>\n","protected":false},"author":12,"featured_media":35116,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[889],"tags":[],"class_list":["post-35076","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-fiscal-en"],"_links":{"self":[{"href":"https:\/\/addwill.eu\/en\/wp-json\/wp\/v2\/posts\/35076","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/addwill.eu\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/addwill.eu\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/addwill.eu\/en\/wp-json\/wp\/v2\/users\/12"}],"replies":[{"embeddable":true,"href":"https:\/\/addwill.eu\/en\/wp-json\/wp\/v2\/comments?post=35076"}],"version-history":[{"count":1,"href":"https:\/\/addwill.eu\/en\/wp-json\/wp\/v2\/posts\/35076\/revisions"}],"predecessor-version":[{"id":35123,"href":"https:\/\/addwill.eu\/en\/wp-json\/wp\/v2\/posts\/35076\/revisions\/35123"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/addwill.eu\/en\/wp-json\/wp\/v2\/media\/35116"}],"wp:attachment":[{"href":"https:\/\/addwill.eu\/en\/wp-json\/wp\/v2\/media?parent=35076"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/addwill.eu\/en\/wp-json\/wp\/v2\/categories?post=35076"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/addwill.eu\/en\/wp-json\/wp\/v2\/tags?post=35076"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}\n
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\nPartner, Tax Department, addwill<\/p>\n","protected":false},"excerpt":{"rendered":"