Fiscal novelties introduced by the State Budget Law

Law 31/2022, of 23 December, on the General State Budget for 2023 introduced, among many other measures, modifications in the area of taxation.

The changes affect various taxes in the Spanish tax system. The most important of these are detailed below:

Changes in Personal Income Tax 

1. Obligation to file a tax return

The limit of the obligation to file a tax return for earned income is increased from €14,000 to € 15,000 gross per year, in cases where such income comes from more than one payer, or when compensatory pensions are received from the spouse or maintenance annuities or when the payer of the earned income is not obliged to withhold or when full earned income subject to a fixed withholding rate is received.

2. Reduction for obtaining income from work

The reduction for obtaining earned income is increased and the amount below which this reduction will be applied is also increased from 16,825 to €19,747.5.

3.Reductions in simplified direct estimation

The deduction percentage for deductible provisions and expenses that are difficult to justify is increased from 5% to 7%. However, the limit of €2,000 is maintained as the maximum amount of this expense.

4. New brackets of the savings tax scale

The scale of taxation of savings is modified with a new bracket from €300,000 onwards, setting a tax rate of 28% and for the net taxable income of savings exceeding €200,000, it is increased by one percentage point from 26% to 27%. In addition, these new brackets are also applicable to taxpayers covered by the regime for workers posted to Spanish territory.

5. Extension of the maternity deduction

The current deduction for maternity of 100 € applicable to women with children under 3 years of age who were self-employed or employed and registered with the Social Security or mutual society, is extended to those who a) at the time of the child's birth are receiving a contributory or welfare benefit from the unemployment protection system and b) at the time of the child's birth or subsequently are registered with the corresponding Social Security or mutual society scheme with a minimum period of 30 days of contributions.

Changes in Corporate Income Tax

The tax rate is reduced from 25% to 23% for those entities with a turnover in the immediately preceding tax period of less than 1 million euros and which are not considered to be asset-holding entities.

Changes in Value Added Tax (VAT)

1. Reduction of VAT

VAT on basic foodstuffs such as bread, bread flour, milk, cheese, eggs, fruit, vegetables, pulses, potatoes and cereals is abolished from 4% to 0%.

VAT on pasta and oils is also reduced from 10% to 5%.

The VAT reduction also affects feminine hygiene articles and contraceptives, which will start to be taxed at the reduced rate of 4%.

2. Place of supply of certain services

In order to bring VAT legislation into line with Community legislation, the following services will be deemed to be supplied within the scope of VAT where the recipient is not established in the EU but uses or operates the services in the territory where VAT applies:

  1. supply of intangible services, where the customer is not a trader or businessman
  2. leasing services of means of transport, irrespective of the customer
  3. financial and insurance services, irrespective of whether the customer is a trader or a professional.

Autor: Fernando Lozano
Autor: Claudia Cascant