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2014 Spain tax reform measures submitted for public consultation

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23 Jul. 2014

The Preliminary Bill amends the Personal Income Tax and Non Resident Income Tax, Corporate Income Tax, VAT and the General Taxation Law. We highlight some of the measures proposed for Capital Gains:

The application of index-linked adjustment coefficients (which adjust for inflation by updating the acquisition cost) in property transfers is eliminated.

The application of abatement coefficients to assets acquired before December 31, 1994 is also eliminated.

The differentiation between short and long term capital gains/losses (on transfers) is also eliminated and, consequently, all of them will be considered savings income.

Exit tax: where the taxpayer loses his status due to a change of residence, the positive differences between the market value of the shares of any type of entity or of collective investment vehicles that are owned by the taxpayer, and their acquisition cost, will be considered capital gains that will form part of the savings income and will be attributed to the last tax period for which a personal income tax return mus be filed.

The scale applicable to savings net taxable income will drop ranging from a tax rate of 20% to 24% in 2015 and from 19% to 23% in 2016.

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