The Treasury is proposing a deduction in Corporation Tax for companies that pay above the minimum wage.

The Government has put forward a tax incentive proposal aimed at companies that raise salaries above the minimum wage, whose planned increase by 2026 would reach €1,221 gross per month in 14 payments (a 3.11% increase). The measure would consist of a reduction in the taxable base of Corporate Income Tax, linked to the increase in staff with salaries above the minimum wage.

 

What does the tax deduction consist of?

The proposal establishes a progressive deduction based on the percentage of workers whose salary is above the minimum wage.

The incentive could reach up to 100% of the salary cost associated with the increase in the SMI, depending on the increase in the number of employees benefiting:

• If the increase is less than 5% of the workforce → deduction of 25% from the salary cost.
• Between 5% and 10% → deduction of 50%.
• Between 10% and 15% → deduction of 75%.
• Higher than 15% → deduction of 100%.
  

In companies with fewer than 100 employees, it would be sufficient to hire at least one full-time employee for a year with a salary above the minimum wage. In larger companies, the salary increase should affect at least 11% of the workforce, with a minimum of two employees.

 

Requirements to apply the reduction

The proposal includes strict conditions for accessing the tax benefit:

• Personnel expenses must exceed 70% of operating expenses (labor-intensive companies).
• Workers with salaries above the minimum wage must remain employed for at least two years.
• The salary increase cannot be temporary.
• The taxable base of the tax, after applying the reduction, cannot be negative.
• The calculation of average staff will take into account the actual working hours of each employee in relation to the full working hours.
  

In case of non-compliance, the company must return the unduly reduced amount, together with late payment interest.

 

Context: negotiations for the increase in the minimum wage in 2026

The initiative is part of the negotiations between the Government, employers' associations (CEOE and Cepyme) and unions to reach an agreement on the increase of the minimum wage in 2026.

While the Ministry of Labor is pushing for a wage increase, the Treasury is proposing this deduction as a way to mitigate the impact on business costs. However, the proposal has generated debate in both the business and labor sectors, and will need to be formally implemented through regulations if it is ultimately approved.

 

What impact could this have on SMEs and self-employed business owners?

For many SMEs and micro-enterprises with high payroll costs, this measure could mean:

• An effective reduction in corporate taxation.
• A tax planning tool linked to salary policy.
• An incentive to professionalize salary structures in sectors with wages close to the minimum wage.
  

However, the decision to apply this incentive should be analyzed on a case-by-case basis, assessing the real cost, the commitment to maintaining employment, and the impact on the treasury.

 

If this measure is definitively approved, it will be key to review tax and labor planning in preparation for the end of the 2026 fiscal year.