tax measures for FY 2022

The main tax measure introduced by the Draft of the Spanish General Budget Law (2022 Draft) is, with no doubt, the minimum Corporate income tax rate of 15%, of which we informed about in our last post.

However and based on the actual wording of the Draft, we would like to highlight the following two measures: (1) which affects a vast majority of Spanish citizens as it modifies the general reduction limit for pension plan contributions; and, (2) the reduction of the Corporate tax quote relief for companies dedicated to the rental of permanent homes.

Despite we need to wait until the Law is finally approved to know its final wording, we deem it convenient knowing these contents well in advance.

✔ In the area of Personal income tax, the general limit of reduction of the individual’s taxable income is once more decreased although it is foreseen that such limit may also increase not only through the employer’s contributions, as it happens now, but also through the employee’s contributions to the same social welfare instrument.

✔ Accordingly and with effects as from January 01, 2022, the general reduction limit is decreased from 2,000 euro a year to 1,500 euro. However and with the aim of promoting a joint effort between employees and employers, this limit is increased in 8,500 euro providing that it derives from the employer’s contributions or the employee’s contributions to the same social welfare instrument for the same or an amount lower than the employer’s contribution.

✔ Another sector of the economy which is not benefited from the 2022 Draft tax changes either includes the entities that are dedicated to the rental of permanent homes. Let us remind you that entities having as their main business the rental of permanent homes located in Spain, that they may have built up, promoted or acquired, can elect to be subject to a special Corporate income tax scheme which permits benefiting from an 85% tax relief on the Corporate income tax quote on net income derived from the rental of permanent homes which remain rented or offered to rent during at least 3 years. With this, their effective Corporate income tax rate is of 3.5%.

✔ The 2022 Draft reduces the tax relief from 85 to 40%; hence, the effective Corporate income tax rate for entities subject to the standard 25% rate is increased to 15%. This measure was supposed to be passed with new regulations on the right to permanent homes on which the Spanish Government is currently working. Since this latter has been delayed, it has finally been introduced in the 2022 Draft. With the resources that may be obtained through the Corporate income tax relief reduction, the Spanish Government expects to cover new reductions on the Personal income tax quote of individual landlords that do not increase rental prices.

Publicado el 11-2021 por PBS