3 November, 2014

Spanish Taxes: What Steps Should We Take Before the Year-End (I)

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The new measures that will come into force with the Spanish tax reform,  expected  for the year 2015, will imply in some way a loos of tax planning opportunities that the current legislation provides.

In order to make the most of such planning schemes, there are a few steps that you can take prior to the end of fiscal year 2014. We emphasize below those that bring our attention, regarding Personal Income Tax.

✔ The new Spanish measures foresee the abolishment, in our opinion, against the tax payer’s position, of:

  • The exemption applying on dividends up to an annual limit of 1,500.00 Euro;
  • The reduction coefficients applying on capital gains through successive transitory systems since fiscal year 1996 (on the date of issue of this post, an amendment filed by the Spanish Government’s party plans to maintain this rule but up to a limit of 400,000. 00 Euro of transfer value); and,
  • The monetary correction coefficients applying on the transfer of real estate.

It is also planned that reductions of share capital implying the refund of contribution as well as the share premium distribution shall be qualified as taxable income, subject to certain limits.

✔ And which will be the practical implications of these rules for most of the Spanish taxpayers? Is it really necessary to anticipate change?

If you were thinking of receiving dividends from your company, selling any property assets, carrying out a share capital decrease with a refund of capital or distributing the share premium, it is really worth analysing when is the best moment to do it and define the most optimal strategy. As mentioned above, the tax treatment is about to change in fiscal year 2015 but not in the benefit of the taxpayer.

✔ Remember that it is always better to go hand-in-hand with a tax expert, that will help you comply with the legal regulations and take the maximum advantage of the regulations currently in force.

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