Pillar Two: the Complementary Tax and forms 240, 241 and 242

It is a direct and personal tax levied on the income of group entities when the jurisdiction where they are located taxes below a minimum rate of 15%. It was created by Ley 7/2024 (the Spanish Complementary Tax Act), which transposes into Spain the Directiva (UE) 2022/2523 (Directive (EU) 2022/2523) on the global minimum level of taxation, known internationally as Pillar Two.

There is only 1 entry threshold: the net turnover of all group entities, including excluded ones, must be equal to or greater than €750 million in at least 2 of the 4 immediately preceding tax periods, according to the consolidated financial statements of the ultimate parent entity. If any financial year lasts more or less than 12 months, the figure is adjusted proportionally.

A common mistake is to assume that this is only about multinationals. This is not the case: a group whose entities are all in Spain, if it reaches that figure, is a large-scale domestic group and is equally subject to it.

It applies to tax periods starting on or after 31 December 2023. For a company closing on 31 December, the 2024 financial year was the first affected and its campaign was already submitted in 2026.

The Complementary Tax does not replace or absorb Corporate Income Tax: it coexists with it. Your company will continue to submit form 200 and, if it has related-party transactions above the thresholds, also form 232.

The tax has 3 modalities and the quota for the period is the sum of all 3. The national complementary tax is levied on group entities located in Spanish territory when the group's effective rate in Spain falls below the minimum. This is the mechanism by which Spain reserves the right to collect in its own territory instead of yielding it to another country.

The primary complementary tax is the income inclusion rule: the parent entity located in Spain assumes its corresponding share for the income of group entities located in other jurisdictions that have been taxed below the minimum.

The secondary complementary tax closes the circle. It is triggered when such low-taxed income is not covered by any qualifying income inclusion rule, for example because the ultimate parent is in a jurisdiction that does not apply Pillar Two or is an excluded entity.

Ley 7/2024 also designates a substitute for the taxpayer, who is the one that submits the self-assessment and pays. The order is strict: the ultimate parent entity if located in Spain; failing that, the Spanish parent entity with the highest net book value of tangible assets; and failing that, the Spanish constituent entity with the highest net book value of tangible assets. The substitute can later claim this amount from the taxpayer.

This same criterion decides who the Administration deals with during an inspection, so it is advisable to have the substitute identified before the first letter arrives and not when it is already on the table.

The calculation is done by jurisdiction, not company by company. The effective tax rate is the result of dividing the adjusted covered taxes of all group entities located in that jurisdiction by the net qualifying income of those same entities, expressed as a percentage and rounded to 4 decimal places.

This effective rate is neither the nominal rate of the country nor the accounting rate of a specific company. It starts from the accounting result consolidated at the ultimate parent and is corrected with a battery of tax-specific adjustments. 2 subsidiaries in the same country with identical nominal rates can yield very different effective rates.

The tax rate is the positive difference between 15% and that effective rate. If in a jurisdiction the effective rate is 9%, the tax rate is 6%, and it is applied to the excess profit, meaning the net qualifying income once the substance-based income exclusion has been subtracted.

There is a way out for small jurisdictions: the de minimis exclusion. By annual election, the complementary tax of a jurisdiction is zero when the average qualifying revenue of the financial year and the 2 previous ones is less than €10 million and the average qualifying income or loss falls below €1 million. This does not apply to stateless entities or investment entities.

Managora reconstructs the effective rate jurisdiction by jurisdiction from your consolidated financial statements and shows you the calculation before submitting anything.

Economic substance reduces the base. It is calculated by adding a percentage of the eligible payroll costs of employees performing activities for the group in that jurisdiction and a percentage of the carrying value of eligible tangible assets located there. The definitive regime percentage is 5% in both cases.

During the implementation years these percentages are higher and decrease each financial year until reaching 5%. The table we publish below shows the values set by the law itself, with the exact reference it uses: tax periods starting on or after 31 December of the indicated year.

Eligible payroll costs include salaries and wages, health insurance, pension scheme contributions, payroll taxes and employer social security contributions. Payroll costs capitalised in the value of assets and those corresponding to excluded income are left out.

Eligible tangible assets include property, plant and equipment located in the jurisdiction, natural resources, a lessee's right to use tangible assets there and concessions or licences to exploit real estate or natural resources involving significant investment. Assets held for sale, lease or investment, including land and buildings, are left out. The value is taken as the average of the opening and closing net book balance for the period.

Applying the exclusion is an option. You can waive it, and the waiver is exercised in the information return itself, so it is advisable to decide this with the calculation in front of you and not out of habit.

Yes, during the transitional period, and this is the route by which most groups resolve the majority of their jurisdictions. The complementary tax of a jurisdiction is considered zero if the group submits a qualifying country-by-country report received by the Spanish tax administration and that jurisdiction passes any of 3 tests: the de minimis test, the simplified effective tax rate test or the routine profits test.

Spanish law defines this transitional period as tax periods starting from 31 December 2023 to 31 December 2026, with a transitional rate of 15% for periods starting in 2023 and 2024, 16% for those starting in 2025 and 17% for those starting in 2026.

The safe harbour is not automatic and has express exclusions: it does not apply to stateless constituent entities, and has specific rules for investment entities, joint ventures and transparent ultimate parent entities. It also does not apply if there is no qualifying country-by-country report: the piece that feeds it in Spain is form 231.

In January 2026 the OECD Inclusive Framework approved the Side-by-Side package, which extends the transitional country-by-country report safe harbour by 1 year, up to financial years starting on or before 31 December 2027, excluding those ending after 30 June 2029, maintaining the 17% also for 2027, and introduces a new permanent simplified effective rate safe harbour.

This extension is still an international agreement. As of the date of this guide, the consolidated text of Ley 7/2024 continues with the transitional period ending with financial years starting up to 31 December 2026, so the planning of a Spanish group is done based on the law in force here and is reviewed as soon as Spain incorporates the package.

There are 3 and they do different things. Form 240 is a communication: it tells Hacienda (the Spanish tax authority) which entity will submit the information return, in which jurisdiction it will be submitted and who the taxpayer's substitute is. It must be submitted by any Spanish group entity, although a single communication including all Spanish entities is sufficient. Its deadline is counted backwards from that of form 241: it must be submitted before the start of the last 3 months of that deadline, so it always expires before the information return.

Form 241 is the information return: it contains the entire calculation, the identification of all constituent entities, the group structure, the data to determine the effective rate by jurisdiction, the tax allocation and the record of exercised options. It has no tax quota. The general deadline ends on the last day of the 15th month following the close of the tax period, and is extended to the 18th month in the first period the group enters the tax.

Form 242 is the self-assessment and payment. It is submitted by Spanish entities that have taxpayer status, or their substitute, and is submitted even if the quota is zero. The quota for the period cannot be negative, so this self-assessment never results in a refund.

There is no instalment payment for the Complementary Tax. Neither the law nor its regulations contemplate it: it is paid all at once with form 242. Whoever closes on 31 December can set up a direct debit for the payment under the terms set by the forms' order.

Everything is submitted electronically with a certificate. Form 241 is sent via web service with XML messages or by form, and if the return contains errors it is rejected entirely, meaning you have to correct and resubmit. If a technical problem prevents online submission within the deadline, the electronic headquarters allows submission during the following 4 calendar days.

For tax periods starting before 31 December 2028, and for subsequent ones ending before 1 July 2030, you can opt for a simplified information return in jurisdictions that do not generate complementary tax or do not require entity-by-entity calculation.

The Complementary Tax has its own penalty regime, and it is incompatible with the general one of the Ley General Tributaria (the General Tax Act), so they do not overlap: this one applies.

Failing to submit the information return on time is a serious infringement, with a fine of €10,000 for each data item or set of data that should have been included, with a maximum limit of 1% of the net turnover of all group entities according to the consolidated financial statements of the ultimate parent.

Submitting it incompletely, inaccurately or with false data is also a serious infringement and carries the same fine of €10,000 per data item or set of data, with the same 1% limit.

There is a clear incentive to correct before Hacienda calls: the penalty and the maximum limit are reduced by half when the return is submitted late without prior request from the Administration.

Failing to submit the communication on time, meaning form 240, is a serious infringement with a fixed fine of €10,000. It is the cheapest oversight to avoid and the most expensive to commit, because form 240 has almost no content: it only says who is declaring.

If you detect that you overpaid, the route is not a refund through the form itself, but the rectification of the already submitted self-assessment.

If what you have is a doubt about criteria, keep one thing in mind: submitting a written query to the Directorate General for Taxes does not suspend or extend the submission deadline, and the Administration has up to 6 months to reply. Waiting for the answer to self-assess later ends up in a late submission, with the surcharge for late filing that this entails. Managora establishes the criteria with you, submits your forms 240, 241 and 242 on time and, if the matter warrants it, submits the query in parallel and later rectifies the self-assessment with the reply in hand.