In the tax field, the General State Budget Law includes several new features:
Personal Income Tax (IRPF)
Further progress is being made in reducing the taxation of lower-income workers and taxpayers who bear the greatest family burdens (working women, large families and people with disabilities). The deduction for income obtained in Ceuta and Melilla and the deduction for investment in new or recently created companies have both increased. The full amount of the exemption from the special tax on prizes in certain lotteries and bets is also increased.
The reduction for obtaining income from work is increased (effective from the date of the coming into force of the GSB – General State Budget). Taxpayers with net income from work of less than 16,825 Euros, provided that they have no other income, excluding exempt income, other than that from work, of more than 6,500 Euros, will be able to diminish the amount of their net income from work by the following amounts:
- Taxpayers with net income from work equal to or less than 13,115 Euros: 5,565 Euros per year.
- Taxpayers with net income from 13,115 to 16,825 Euros: 5,565 Euros minus the result of multiplying the difference between income from work and 13,115 Euros per year by 1.5.
When the tax corresponding to the 2018 tax period has been accrued from the coming into force of the General State Budget Law for 2018.
Effective from 1 January 2018, the deductions for maternity, large families and people with disabilities are increased.
- As for maternity deduction, the fiscal incentive could be increased up to 1,000 additional Euros per child when custody expenses are incurred for a child under three years of age in authorized nursery schools and kindergartens. Custody costs shall be understood to mean the amounts paid to nursery schools and kindergartens for the registration and enrollment of such children, their attendance, in general and extended hours, and their food, provided that such costs are incurred for full months and are not considered as income from work in kind that is exempt. In the tax period in which the youngest child reaches the age of three, the increase provided for in this section may be applied to expenses incurred after the age of three up to the month prior to the month in which the second stage of pre-school education may begin. However, the advance payment of this increase in the deduction for maternity may not be claimed.
- With regard to the deduction for large families and persons with disabilities, it is increased for large families by means of a birth cheque of up to 600 Euros per year for each child which forms part of a large family that exceeds the minimum number of children required for the family to have acquired the status of a large family in the ordinary general category (3 children) or in the special category (5 children, among other cases), as appropriate. From 5 July 2018, the deduction for a spouse with a disability and who is not legally separated will be applicable as long as he or she does not have an annual income, excluding exempt income, of more than 8,000 Euros, and does not generate the right to the deductions for disabled descendants or disabled ascendants with the right to apply the minimum, up to 1,200 Euros per year.
- With regard to the obligation to declare, the exclusionary limit established for the obligation to declare income is raised from 12,000 to 14,000 Euros, fixed for the recipients of income from work as a result of the improvement in the reduction for obtaining income from work. However, in 2018, provided that the taxpayer has not died before 5 July 2018, the limit shall be 12,643 Euros.
- As for the deduction for investment in new or recently created companies, effective from 1 January 2018, the deduction percentage increases from 20% to 30% of the amounts invested with a maximum base that has increased from 50,000 to 60,000 Euros.
- A Deduction applicable to family units made up of tax residents of Member States of the European Union or of the European Economic Area is established, consisting of a tax deduction in favour of those taxpayers who are unable to file a joint return because they reside in another Member State of the EU, thus equating the tax payable to that which they would have paid if all the members of the family unit had been tax residents in Spain.
- The percentage of the deduction for obtaining income in Ceuta and Melilla is increased from 50% to 60%, both for taxpayers resident in Ceuta and Melilla and for non-residents of these territories who have obtained income there.
- The exemption from tax on the prizes of certain lotteries and bets is progressively increased. In 2018, prizes for which the total amount is equal to or less than 10,000 Euros will be exempt. If this amount is exceeded, it will be taxed on the part exceeding 10,000 Euros.
Value Added Tax (VAT/IVA)
The tax rate is reduced to 10% on entry into cinemas, and to 4% for remote assistance, home help, day and night care and residential care for dependent persons when a financial benefit covering more than 10% of the price is granted, instead of requiring 75%.
From 1 January 2019, a common threshold of 10,000 Euros (excluding VAT) has been established at Community level for telecommunications, radio and television services and those provided by electronic means by micro-enterprises established in a single Member State. If this threshold is not exceeded, the service will be taxed in the State where the service provider is resident, although it will be possible to opt for taxation at the recipient’s place of business through the mini one-stop-shop (MOSS) scheme, under a binding option for two years.
The exemption for services provided directly to members by regional unions, groups and entities is modified; only those whose members carry out activities of general interest that are exempt from VAT (health care, social assistance and education, among others) are exempt.
Effective from 5 July, the exemption provided for in respect of the carriage of passengers and their luggage by air to or from an airport outside the area covered by the tax will be applied to connecting flights when they are covered by a single ticket.
In the case of exports of goods, effective from 5 July, VAT shall be refunded to traveller’s resident outside the Community regardless of the amount of the invoice (the minimum amount of 90 Euros is no longer applicable).
Corporate income tax
The reduction in the income from the transfer or use of operation (patent box) is modified, defining which income will be entitled to the reduction and its scope. Thus, utility models and advanced registered software that has been obtained as a result of research and development projects are included in the definition. It regulates how to determine the positive income that can be reduced and the effects of obtaining negative income in subsequent years. Furthermore, a provisional regime is introduced for intangible assets available before 1 July 2016, effective until 30 June 2021, from which date only the new regime will apply.
In addition, the planned reduction will also be applied to positive income from the transfer of the aforementioned assets when it is made between entities that are not related. Furthermore, it is established that for the purposes of determining the legal protection regime for the aforementioned intangible assets, what is set forth in Spanish, European Union and international legislation on industrial and intellectual property applicable in Spain shall apply.
Effective from 5 July 2018, film producers who take advantage of the deduction for investments in film productions, audio-visual series and live performances of performing and musical arts will be subject to certain obligations (incorporating a specific reference to the tax incentive in the credits and advertising; submitting documentation and material to the Film and Audio-visual Arts institute – ICAA in Spanish, reporting for statistical purposes to the ICAA, and partially assigning rights to works for promotional purposes).
The powers of the tax authorities to verify the right to convert deferred tax assets into receivables from the tax authorities are extended to enable them to verify any of the circumstances determining such conversion, in particular accounting losses.
Wealth Tax
The requirement for the tax to be levied is extended in 2018.
Business Tax or Tax on Economic Activities (IAE)
A number of changes are made to the Business Tax rates.
Transfer Tax and Stamp Duty
The scale that taxes the transmission and rehabilitation of nobility and titles at 1% is updated.
Arrabe Integra