Changes in the draft on the fiscal reform in Spain

The past 20th of June, the Draft of the Law on the fiscal reform was approved. It modifies the PIT, the tax on partnerships, rent by non-residents, special taxes, the VAT and the General Law on Taxation.

The reform will take place in two phases: the first one will enter into force on 1 January 2015 and the second one on 1 January 2016.

Bellow we will summarize the main new features of this fiscal reform.

PIT (Personal Income Tax)

Reduction of the tax rates in Spain

Taxpayers with a salary bellow 12.000€ per year shall have it all at their disposal  since it will no longer be taxed. There will be an average reduction of 12,50% for all taxpayers with the new PIT.

Taxation of severance pay in Spain

The minimum exemption for the taxation of severance pay shall be 180,000€

Reductions for renting property in Spain

The current deduction of 60% and 100% for young tenants shall be 50% in all cases.

Creating a plan for long-term savings in Spain

Investments in savings products such as deposits or insurances for a period of 5 years or longer shall be exempt from taxation on the yields obtained.

Patrimonial profits and losses in Spain

Capital gains from auction payments of a permanent residence are exempt.

Removal of the deductions of permanent residences and of Company savings accounts in Spain

The deduction for rent is eliminated and subject to the same fiscal treatment as a permanent residence, without taking into account whether it is rented or owned.

Deduction for large family or for disabled persons

In order to reduce taxation of workers with large family responsibilities, three new deductions have been approved in the annual tax for families with dependent disabled children, families with dependent parents and large families (three children or more, or with two children, one of which is disabled). In each case they can receive up to 1.200€ per year.

Obligation to declare income in Spain

The threshold for the obligation to declare income rises from 11.200€ to 12.000€.

Tax on the income of non-residents in Spain (TINS)

A new postulation is included, which allows taxpayers residing in other states of the European Union to opt to be taxed as income taxpayers in Spain.

With the fiscal reform, provided that the income obtained by a sale of what has been a taxpayer’s main residence in Spanish territory is reinvested in the acquisition of a new main residence, the taxpayer is allowed as a non-resident in Spain to be exempted from paying taxes on the profit made.

General Tax Law for the fight against fraud in Spain

The fiscal reform allows special measures to be taken in the fight against fraud. Bellow we shall enumerate some of these measures.

Publication of lists of debtors (defaulters): The Tax Administration agrees to publish on a regular basis a list of debtors to the Treasury under the following circumstances:

  • The total amount of tax debts and penalties of income exceeds the amount of 1.000.000 euros.
  • At least one year has passed since the closing of the payment period.

Tax debts and penalties that are postponed or suspended, shall be included in another list with the following information:

  • Identification of the debtors
    • Natural persons: name, surname and ID
    • Legal persons: name or complete corporate name, and NIF
  • The full amount of the debts and penalties to be paid

The date and means of the publication, the corresponding files and registers, as well as when the information is to be discarded shall be legally established. In order to do this, the following measures shall be taken:

  • Inspectors will be able to check on the prescribed practices where a negative tax base has been generated
  • The term for beginning or ending a disciplinary procedure when an expert appraisal is requested has been suspended
  • New regulation of the terms of the inspection procedure
  • The Central Economic-Administrative Tribunal’s is given the jurisdiction to hear claims regarding proceedings between individuals, whenever the fiscal domicile of the claimant is outside Spain

This article is not considered as legal advice

Mariscal & Abogados' services in the tax field include, among others, advice on Spanish local taxes, international taxes and transfer pricing. If you have a query, do not hesitate to Contact us.