Tax credits for green projects: what really exists in Spain

Spain has no general system of “green tax credits” like those in other countries (for example, the tax credits in the United States). When people talk about “tax credits for green projects”, they are using a broad term that, in practice, groups very different instruments: deductions, free depreciation, reliefs on local taxes and grants. Telling them apart is key to avoid counting on benefits that do not exist.

This article sets out what your green project can really use in Spain in 2026 and links to the specific guides for each case. To get your bearings, start with green taxation in Spain.

What does “tax credit” mean in the Spanish context?

A tax credit, strictly speaking, is an amount subtracted directly from the tax liability. In Spanish environmental taxation, the closest thing is the deductions from the tax liability (above all in personal income tax) and other mechanisms that reduce the tax bill indirectly, such as depreciating an investment early. It is best not to present them as a universal “credit” percentage on any green spending, because each incentive has its own base, cap and beneficiary.

Incentives actually in force

1. Free depreciation for renewables (companies)

This is the main advantage for companies and for sole traders under direct assessment. The seventeenth additional provision of the Corporate Income Tax Act (introduced by Royal Decree-Law 18/2022 and extended to 2026) allows free depreciation of renewable electricity self-consumption installations, with a cap of 500,000 euros and maintaining the workforce for 24 months. It is not a tax-liability credit, but it lowers the taxable base and improves cash flow.

2. Personal income tax deduction for energy efficiency (individuals)

For homes, the deduction for energy-efficiency improvement works offers three brackets (20%, 40% and 60%) depending on the saving achieved, extended for works until 31 December 2026 (2027 for buildings). It covers measures such as insulation, efficient windows, boiler replacement or installing solar panels, always with the energy performance certificate proving the improvement.

3. Reliefs on local taxes

Municipalities may grant relief, if their bylaw provides for it, on the IBI (property tax, up to 50%) and the ICIO (construction tax, up to 95%) for solar self-consumption, and on the IVTM (vehicle tax, up to 75%) for electric and hybrid vehicles. They are optional and have to be applied for in each municipality.

4. R&D&I deduction

Projects that develop clean technologies with a genuine research-and-development component may qualify for the R&D&I deduction under corporate income tax, which is indeed an established tax-liability deduction. It requires meeting the tax definition of R&D&I, and a reasoned report is advisable to provide legal certainty.

What happened to the environmental investment deduction

This is worth clarifying because it is a common source of confusion: the old deduction for environmental investments under corporate income tax was repealed with effect from 1 January 2015 by Law 27/2014. There is therefore no general deduction percentage for buying assets “of environmental interest”. Any content that claims otherwise is out of date.

How they relate to grants

Tax incentives are often combined with direct grants or soft loans, many financed by Next Generation EU funds. We explain this in detail in our guide to green taxation in Spain. Compatibility needs watching: the grant received may reduce the base of the tax benefit to avoid duplicating the support.

Steps to make the most of them

1. Define the project: target saving or emissions reduction, cost and eligible investment.
2. Identify the right instrument: depreciation (company), personal income tax deduction (home), local relief or grant.
3. Gather the documentation: invoices, technical reports and energy certificates.
4. Lean on a tax adviser: national, regional and local rules coexist and need fitting together well.
5. Justify and keep records: documentation is the basis in the event of a tax review.

Frequently asked questions

Is there a single tax credit for any green project?

No. Spain has no general sustainability tax credit. There are specific instruments (depreciation, the energy-efficiency deduction, R&D&I, local reliefs) with different requirements.

Do the energy-efficiency deductions apply to companies?

No. That personal income tax deduction is for individuals and homes. Companies use free depreciation and, where applicable, the R&D&I deduction.

If your project aims to reduce emissions, with Manglai you can measure its impact and your carbon footprint to prioritise the investments with the greatest environmental return.