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Spain approves tax reform for 2015

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9 Dec. 2014

The Spanish Government has definitively approved three Laws for tax reform, published last Friday November 28 at the Official Gazette, coming into force as of next January 1, 2015:

  • Law 26/2014 modifying Personal Income Tax Act (IRPF) and Non Resident Income Tax Act (IRNR).
  • Law 27/2014 modifying Corporate Income Tax Act (IS).
  • Law 28/2014 modifying VAT (IVA).

These reforms cut the corporate and individual income tax rates in two stages, 2015 and 2016.

The main changes are the following:

  • The Corporate Income Tax rate will fall from 30% to 28% in 2015 and to 25% in 2016. SMEs will not have a reduced tax scale but a reduction of the taxable base.
  • The minimum Personal Income Tax rate will be reduced from 24,75% to 20% in 2015 and 19% in 2016.
  • The top rate for Personal Income Tax will fall from 52% to 47% in 2015 and 45% in 2016. In addition, the top rate will apply to income over 60.000 Euros, down from 300.000 Euros this year.
  • Personal exemption will be set to 12.000 Euros.
  • The minimum capital gains and savings income tax rate will fall from 21% to 20% in 2015 and 19% in 2016. The top marginal income tax rate will fall from 27% to 24% in 2015 and 23% in 2016. The top rate will apply to income over 50.000 Euros, up from 24.000 Euros this year.
  • The Non Resident Income Tax rate for EU/EEA residents will be the same as resident for capital gains and savings income, falling from 21% to 20% in 2015 and 19% in 2016. Others will be taxed at a 24%.

Special reference to Capital Gains Tax (residents and non-residents)

  • All capital gains will be taxed at savings rates regardless of the holding period.
  • Indexation will no longer apply.
  • Inflation relief for properties purchased before 1994 will apply with the limit of 400.000 Euros.
  • Only for residents: any capital gains made by taxpayers over 65 will not be taxed when reinvested in pension annuities with a maximum of 240.000 Euros, in addition to the main home tax relief that still applies.

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